Saga, the over 50s travel and insurance group, is about to launch a search for a new chief executive ahead of potential plans for a £3 billion ($4.5 billion) U.K. IPO.
The company is thought to be looking for a more "consumer focused" City executive, who could bring a fresh approach to the insurance business.
Saga, which is one half of private equity backed Acromas, is thought to be in the process of being separated from roadside rescue firm, the AA, which, according to sources, is already being eyed by half a dozen sovereign wealth funds.
Acromas is owned by CVC, Charterhouse and Permira, and brings together two of Britain's most recognizable brands employing 38,000 people. The 2007 merger of the two groups was done at the apex of Britain's buy-out frenzy and helped create one of the largest companies in Britain. In recent times, it has been the focus of much media speculation after abandoning its initial strategy of pushing for a £8-9 billion IPO of the whole group.
Its private equity backers recently completed a £3 billion refinancing for the AA, which has given them significant breathing room and allowed them to separate the strategy of the two businesses. It has also made it easier for prospective buyers of the AA, as the company now has a portable financing package in place. This means possible bidders do not have to organize new debt for the company, which would also need about £1 billion ($1.5 billion) of equity.
The refinancing has been structured to sell corporate bonds in the market, which are currently being sold down in tranches. The securitization deal has recast the AA as a type of utility company rather than a roadside rescue firm thanks to its historically stable income and earnings profile.
Although no sales process has been started by the company, the AA has already been touted to a number of leading sovereign wealth funds and pension funds, which are considering new opportunities in search of yield.
Saga, is among a handful of would be stock market floats, including Royal Mail, Merlin, Global Switch and TSB which have been lined up for IPOs at end of this year or and into next year. Most companies and their advisers are keenly watching recent market volatility caused by comments from the Federal Reserve and worries about a Chinese credit crunch.
Under chief executive Andrew Goodsell the company has defied the recession and continued to produce growth and expand market share. In 2011, Acromas saw its sales rise 15.1 percent to £2.1 billion ($3.1 billion), with earnings before interest, tax, depreciation and amortization up 3.8 percent to £519 million ($780 million).