Saga shares priced at bottom end

Conditional trading began with the valuation set at 185p by the offer, which was expected to raise £550m, and put Saga’s market worth at £2.1bn.

But it was at the lowest end of the 185p-245p price range announced two weeks ago, which would have seen the group valued at up to £2.5bn.

It comes after fashion chain FatFace said it had shelved plans to float due to current market conditions.

Saga had indicated earlier this week that the price would be towards the lower end of the expected range to ensure a positive aftermarket performance, although it said demand from ordinary retail investors had been “exceptional”.

A rash of other recent flotations has seen Pets at Home, Poundland and electrical appliances online retailer AO join the stock market in recent weeks, with property chain Zoopla and discount chain B&M planning to join them.

They were joined yesterday by easyHotel, the budget hotels group owned by easyJet founder Sir Stelios Haji-Ioannou, which said it plans to raise £60m with a listing on London’s AIM market.

Shares in Saga rose as much as 5 per cent to 195p in early trading but later settled back to just above 188p.

The float saw 50 per cent of the stock on offer allocated to retail investors, a “substantial majority” of them to customers.

The group previously said that it had canvassed customers and found around 700,000 would be interested in buying shares.

Institutional investors were allocated the remaining half of the shares. Its private equity owners will hold the majority of the stock.

Saga, which started as an out-of-season holiday provider in 1950, now offers services ranging from cruises and holidays, home and motor insurance, savings and share dealing through to the UK’s best-selling Saga Magazine.

It was sold for £1.35bn in a 2004 deal involving management and private equity firm Charterhouse.

Executive chairman Andrew Goodsell said: “We have been very pleased with the level of demand for Saga shares from both retail and institutional investors.

“We are delighted to have so many of our customers as shareholders and to have a high quality group of core institutions who we believe will be long-term supporters of the business.”