Personal Pension  

Saga float will boost company’s wealth arm

The chief market analyst for CMC Markets said Saga was well placed to take advantage of the boosts to the ‘grey pound’ demographic, especially following the recent Budget announcements on pensions and annuities.

According to Mr Hewson, there “is little question that the long-term business model can remain profitable”.

He said: “Saga’s future long-term success will be dictated in catering to a certain age-group, which means there is no reason to suppose it will not continue to be profitable as a public company. This is probably why there has been a significant amount of interest in the share issue among Saga’s customers, hence the bigger than expected allocation.

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“Another factor in its favour is that the demographics in society will undoubtedly work to its advantage given that people are living longer, with the over-50s population expected to increase from an estimated 22.8m people to 29.1m people in 2033.”

He said Saga was in an ideal position to benefit from this ‘grey pound’ sector of the economy, particularly if the company succeeds in its plans to grow its wealth management business My Wealth as a result of the recent pension changes announced by the Chancellor.

Saga is set to float 50 per cent of its business, an increase on the initial 25 per cent first mooted. A significant proportion of the shares is available to retail investors.

industry view

Richard Hunter, head of equities for Bristol-based Hargreaves Lansdown – an authorised intermediary for Saga shares – said: “The intention to float is further proof of renewed corporate optimism on recovery prospects. The number of IPOs in the year to date is already running high, and the ability of private investors to participate in this flurry will be enhanced by the Saga float.”