6th Jan 2026 12:34
(Alliance News) - Kelso Group Holdings PLC on Tuesday said it has completed its investment in London-based Saga PLC, expressing optimism the company can revive its multibillion pound status.
The investor in London-listed companies reported a new holding in the provider of products and services for people over 50, as it noted the completed purchase of 400,000 shares at an average price of 386.5 pence in January.
Saga shares rose 6.2% to 407.23 pence around midday on Tuesday in London, for a market capitalisation around GBP589.9 million. The value of the firm stood at GBP2.1 billion back in 2014 at the time of its IPO.
Shares in Kelso were up 1.7% at 3.05 pence.
Discussing the rationale behind the purchase, Kelso noted Saga's return to being predominantly a travel business, with this driven by its "highly cash generative and asset backed ocean and river cruise divisions" for over 50s.
Kelso explained that revenue in these divisions has risen over fourfold since the IPO, with earnings before interest, tax, depreciation and amortisation in ocean and river cruising nearing GBP100 million.
The investor also highlighted the company's deleveraging. It noted its leverage ratio of net debt to Ebitda average 7.9x over the last five years, with this now down to 4.3x as of July 31.
Kelso added that formal company guidance indicated this ratio will fall below 2.0x by January 2030, with Kelso anticipating it may occur beforehand.
Further, Kelso said it believes the company is undervalued. "Despite a strong share price in 2025, we believe there is significant upside from here when compared to peers," said the investor.
The company noted that the potential for inclusion into the FTSE 250 index as the share price improves, and the "likely" resulting demand from index funds.
Peer group performance was also cited by Kelso in its investment rationale, as it noted that Viking Holdings Inc, which is also involved in ocean and river cruises, has seen its value nearly triple since April 2024.
Kelso also praised Saga's management, crediting the company's "significant achievements" over the last five years to its management team.
The investor said it has written to the Saga board, offering "constructive proposals" in support of value creation, such as increased targeting of US investors.
"We believe Saga's management have done an excellent job turning Saga around in the last 5 years and materially reducing the debt while growing pre-tax profit. The importance of Sir Roger De Haan's personal backing through significant equity and loan commitments during those hard times should not be forgotten acknowledging that the loans have now been repaid. We believe Saga has the ability, with its focus on travel with ancillary financial services, to return to being a multibillion pound company," said Kelso Chair Nigel Knowles.
By Christopher Ward, Alliance News reporter
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