Wood poised to join Saga sale race

Insurance tycoon Peter Wood is ready to step into the £1bn sale of Saga, the over-50s holiday group.

Mr Wood, who made his fortune from the Direct Line telephone car insurance business, expects to be asked to run the financial services operation of the Saga group.

Although the business is lining up a flotation, venture capitalists have deluged UBS, the investment bank handling the sale, with offers to buy the business outright.

Among those believed to be considering a bid are Cinven, Apax, JP Morgan, Candover, HG Capital and Montagu.

Expressions of interest must be submitted by Thursday but the auction will get under way in September.

City sources believe Saga will abandon its float plans in favour of a sale.

The private equity groups want Saga because of its financial services arm, which specialises in selling insurance to the over-50s and has an 8 million-strong client base.

Mr Wood, who runs e-sure and First Alternative for banking group HBOS, said he was not involved in any bid team. But he added: "I could be brought into the loop at any time."

Mr Wood's reputation in the insurance business - he has founded successful insurers in Britain, Spain and the US - is such that he would be regarded as partner of choice for most private equity groups interested in the Saga business.

Any successful bidder is likely to split Saga in two. The holiday business could be rebranded or sold on to a third party .

Mr Wood - who is understood to have been keen to buy the AA when it was sold recently by Centrica - would not abandon his HBOS-backed businesses if he were to become involved with Saga.

HBOS would be likely to provide funds for any bidder. Last night the bank refused to comment.

Saga makes 90% of its £82m profit from its insurance arm. But the potential is larger.

The business, which was founded by Sidney de Haan in 1951, has 9% of the over-50s motor insurance market and covers 5% of their homes.

As well as holidays, Saga runs share dealing services and operates two radio stations. It also publishes a magazine with a circulation of nearly 600,000.

Last year was the group's 12th consecutive one of profits growth. Turnover was £383m.

The proceeds of the Saga sale will go to Roger de Haan and family trusts.

Two years ago Mr de Haan bought out his younger brother Peter - who was once the group's finance director - for £80m.

The deal included an "anti-embarrassment" clause, which promised an extra payment if Roger rapidly sold on the company. That clause expired last month.

The company insists it is pressing ahead with a flotation and in May was close to appointing retail expert Stuart Rose as chairman.

He agreed to take the job but pulled out at the last moment when he was lured to Marks & Spencer as chief executive.

Saga has been listed on the stock market before. It floated in 1978 but was taken private again before the first Gulf war in 1991.

The business is being put up for sale at a time when its target audience is growing rapidly. By 2020 more than 50% of the population will be over 50.