Shares in Erinaceous Group have continued to fall this week following the withdrawal of private equity firm, 3i, from the takeover race.
Shares in the property specialist fell 6% this week. As Insurance Times went to press, shares were trading at 247p.
The departure of buy-out specialist 3i leaves HBOS as frontrunner to acquire the group, whose insurance division is one of the largest property brokers in the UK.
3i first expressed an interest in Erinaceous in April, tabling an offer of £375m, equivalent to 300p a share. At the time it was thought to be a security measure in case rival bidders walked away.
There has also been interest from the Consensus Business Group, headed by property guru Vincent Tchenguiz.
Last week, one of the largest fund management groups in the UK, Legal & General Investment Management, bought over 7% of the company, fuelling speculation that a move on the group could be in the offing.
The depreciation of Erinaceous’ share price is thought to have been contributed to by short selling on the stock market.
A spokesman for Erinaceous said: “Either the company can soldier on through this short selling, or it can opt for the private equity option.”
The spokesman added that despite the deflated price, its management would be willing to sell.
It is widely believed that Erinaceous chief executive Neil Bellis and chief operating officer Lucy Cummings, who own almost 20% of total shares in the company, are unhappy with it being listed.
Some also suggest that a string of 12 acquisitions in the last year have proved difficult to integrate.
A source close to the company said: “The major shareholders want to take the company private. They are looking at a venture capitalist to come in.”
But a question mark remains over the nature of the return to the private fold. It has been speculated that the business could be split as part of a takeover.
This could entail a management
buy-out led from its insurance services division, which controls premiums of £250m.