Two private equity firms founded by former partners at Goldman Sachs were the architects of a £375m takeover bid rejected last month by Saga, the over-50s travel and insurance provider.
Sky News has learnt that Reverence Capital Partners, which was set up by former Goldman veteran Milton Berlinski in 2013, was the leader of a consortium that pitched a 33p-a-share offer to the board of Saga several weeks ago.
The London-listed company spurned the approach in favour of a refinancing led by Sir Roger de Haan, its former chief executive, who is to take a substantial stake in Saga at an average price of 22p-a-share.
Insiders said that Reverence and its partner had lined up investment bankers at Morgan Stanley to work on their bid, but that the consortium had been forced to withdraw after Saga’s board declined to provide the buyout firms access to information needed to conduct due diligence.
Image: Mark Wilson, the former Aviva chief executive, was spearheading the private equity approach Pic: Aviva
Most buyout firms are not permitted to launch hostile bids for public companies under the terms of their funds.
Mark Wilson, the former Aviva chief executive, was spearheading the private equity approach.
On Thursday, Saga’s chief executive Euan Sutherland attacked the company’s previous private equity backers – Charterhouse and Permira – when he said that they had “left Saga in a weakened position, loaded with debt, starved of investment and driven with a very short term focus”.
A source close to the Reverence bid said that its proposed business plan would have left Saga with lower debts than its board currently envisages.
Mr Sutherland also described Saga as “a proud British business, with a strong brand, loyal customers and great people” with the aim of “creating significant long-term value for all our investors”.
Image: Saga chief executive Euan Sutherland attacked the company’s previous private equity backers
The company is, however, unlikely to resume paying dividends for several years.
An insider close to the private equity approach pointed to the deterioration in the COVID-19 outlook for British consumers since its offer initially emerged.
Shares in Saga were trading at about 14.85p on Thursday afternoon, less than half the value of the indicative offer.
Alongside its £150m capital-raising, of which Sir Roger is contributing two-thirds of the money, the company is to undertake a stock consolidation which it hopes will reduce the level of volatility in its share price.
Sir Roger’s return as a major shareholder and chairman has been cited by people close to Saga as a sign of confidence in its management and strategy.
His installation represents a remarkable comeback 16 years after he sold the company to Charterhouse, the British private equity firm, for £1.35bn.
April 2019: Saga moves to inject life into insurance offer
The son of Saga’s founder Sidney de Haan, Sir Roger has not been a shareholder in the company since then.
Saga raised £550m in an initial public offering in London in 2014.
At the time, the company was worth well over £2bn, while it now has a market capitalisation of little more than £150m.
Like other cruise and tour operators, Saga has seen substantial chunks of its operations brought to a halt by the coronavirus crisis.
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It has said it hopes to resume cruises later this year, although Saga and other operators have said they expect passengers to return only slowly.
Saga disclosed last year that Elliott, the activist hedge fund manager, had taken a 5% stake, prompting expectations of a break-up or other corporate activity.
The company also has a sizeable insurance business, selling a broad range of products targeted at the so-called ‘grey market’.
Saga declined to comment on the private equity consortium, while Reverence could not be reached for comment.