Premium finance specialist Premium Credit is looking for a trade sale after a stock market float was ruled out.

Company sources confirmed that the three major shareholders, Electra Trust, HSBC and the former management team are looking for an exit strategy from their investment in Premium Credit.

The news was backed up by a letter sent out to Premium Credit clients explaining the situation in an attempt to retain market confidence during the sale period.

Lexicon Partners, the investment bank managing the sale for Electra Partners Europe, is thought to be in talks with several prospective buyers with the emphasis on a trade sale, said a highly placed source.

Though it is unlikely there will be an announcement in the near future, the sale could be the first step in a major restructuring within the premium finance sector.

There has been a change of ownership at Finsure, following the buy-out of owner NIG by Royal Bank of Scotland earlier this year. Also the chief executive's role at Singer & Freelander, vacated by Ian Jerrum, will be incorporated into group director Mike Bell's portfolio..

Rumours have been fuelled by talk of an investment bank looking at consolidation within the industry sector.