Over-50s holiday company Saga says it hopes to raise £550m from its float on the London Stock Exchange, which it will use to reduce its debts to about £700m.

The Folkestone-based firm is aiming for a valuation of between £2bn and £2.5bn in its initial public offering (IPO), the shares valued from 185p to 245p each.

Its owner Acromas Holdings is expected to sell a proportion of its shareholding via a wholly-owned subsidiary Acromas Bid Co Limited.

The private equity firm is owned by the Charterhouse Funds, the CVC Funds, the Permira Funds, numerous employees and other institutional investors. Acromas also owns the AA.

Acromas executive chairman Andrew Goodsell said: “This announcement reflects the strong level of investor interest shown in acquiring Saga shares, which we believe underlines the potential that exists in the company.

“We have also been enormously pleased with the positive response from customers to the announcement that we intend to IPO the business and are looking forward to further strengthening our relationship with customers by allowing them to invest in the business.

“We are fortunate to have a discerning customer base that can see the long-term strength of the Saga brand.

“This announcement is a further important step in our journey toward becoming a public company with our customers and employees at the heart of it.”

Saga chief executive Lance Batchelor said: “Everyone at Saga has been delighted by the positive response to the news that Saga intends to IPO.

“Saga is a classic British brand, offering a unique portfolio of products and services to the over-50s market.

“The strength and breadth of Saga is reflected in the positive response that we have received to the offer.”

Saga was founded in Folkestone in 1959 by Sidney De Hann and stayed in family ownership after his retirement in 1984, taken over by his son, the philanthorpist Sir Roger De Haan.

He sold the business to Charterhouse in 2004, which merged Saga Group with the AA to form Acromas Holdings.