Saga shares jump on proposed £150m equity raise backed by former boss
Shares in over-50s insurance and travel business Saga rose today after it confirmed plans to raise £150m via an equity placing backed by its former chief executive.
The company said Sir Roger De Haan – its former chief executive and son of the company’s founder – was planning on investing £100m in the company.
De Haan sold Saga for £1.3bn in 2004 to private equity group Charterhouse.
De Haan is also set to replace Patrick O’Sullivan as chair of the company and take a seat on Saga’s board.
The owner of Saga Holidays, Saga Cruises, Titan and Destinology had seen its stock price plummet by 74 per cent this year by Friday’s close, as the coronavirus crisis hammered travel demand.
Today Saga’s share price jumped nearly 35 per cent to 18p.
“This is a surprising but sensible move that should keep the Saga group together,” said analysts at Peel Hunt, with a “hold” rating on the stock.
William Ryder, equity analyst at Hargreaves Lansdown, said: “The new money will dilute current shareholders, but we doubt there are too many long term investors left. The shares have fallen heavily over the last few years, and the pandemic only threatened to administer the coup de grace.
“We suspect the shareholder base now comprises mostly vestigial holdings that don’t merit selling and more speculative investors hoping for a miraculous recovery. Neither is likely to mind being diluted, especially with a seasoned former CEO returning to the leadership team with fresh cash.”