Investors holding almost a quarter of Northern Rock’s shares have thrown their weight behind a rescue bid by the stricken bank’s management, in a blow to a consortium led by Virgin. Financial Times
SRM Global and RAB Capital, two hedge funds that had previously supported an abandoned bid by private equity group Olivant, together with Legal & General and Schroders, are opposed to Virgin’s takeover proposal. Together the four hold 24.3% of the shares, while several more shareholders are understood to be supporting the plan led by Rock non-executive Paul Thompson.
The Virgin consortium already faced opposition from a group representing private investors, who together hold a further 25%. Virgin needs to win a vote of shareholders in order to take a majority stake, and wrote to them recently to ask for support.
However, several of the shareholders would like Thompson to take a less conservative approach to his business plan, which proposes shrinking the bank in order to pay back £25bn borrowed from the government.