UPDATE 2-Insurer Saga could announce $5 bln London listing next week

Wed Apr 23, 2014 1:06pm EDT

(Recasts, adds background, comments)

By Freya Berry and Anjuli Davies

LONDON, April 23 (Reuters) - British over-50s insurer Saga is planning to announce its intention to float next week in a London stock market debut that could value the company at 3 billion pounds ($5.1 billion), two sources familiar with the matter said on Wednesday.

The share offer would be the UK's biggest insurance listing for at least five years, and the largest European insurer to list since Poland's PZU SA in 2010, according to Thomson Reuters data.

Saga, which is owned by private equity firms Permira , Charterhouse and CVC, would raise at least 750 million pounds taking into account the London Stock Exchange's requirement for a minimum free float of 25 percent, one of the sources said.

Saga, which also offers cruises and a dating service, is seeking a sizeable retail offering in what has been a bumper year for London listings. It has sent out letters to its approximately 2.5 million customers as it targets its own customer base. Investors can also register for shares via its website.

"We are preparing ourselves for a potential IPO (initial public offering)," Paul Green, director of communications at Saga, said. "We have not yet declared any intention to float."

A growing number of British companies are seeking stock market debuts this year. On Wednesday cake shop chain Patisserie Valerie said it was planning a stock market listing, while retailers Poundland and Pets at Home have already made debuts in London.

Thomson Reuters data showed that last month London listings reached their highest since the first quarter of 2007 as companies cash in on strong equity markets.

The private equity firms acquired Saga along with the Automobile Association in 2007. The consortium paid 6.3 billion pounds for the two firms, which were then merged under Acromas, a newly-formed parent holding company.

Saga's earnings before interest, tax, depreciation and amortisation (EBITDA) were 233.7 million pounds in the financial year to January 2014. Last month Saga undertook a 1.4 billion pound refinancing of its debt to pave the way for a potential listing.

The last major UK insurance company to float according to Thomson Reuters data was Direct Line, which was valued at 2.6 billion pounds after a 2012 listing. Direct Line is currently trading at a price multiple of almost 10 times earnings.

Bank of America Merrill Lynch and Goldman Sachs will lead the Saga deal, with Credit Suisse and Citi as joint bookrunners, one of the sources said.

Permira and the banks declined to comment. CVC and Charterhouse were not immediately available to comment. ($1 = 0.5944 British Pounds) (Editing by Louise Heavens and Jane Merriman)