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Monaco hedge fund building stake in Rock
Real estate news By The Northern Echo
Thursday 11th October 2007
HIGH street lender Northern Rock saw its share price surge by more than a quarter yesterday after it emerged a Monaco hedge fund had amassed a four per cent stake in the business. The revelation that SRM Global had built up a stake in the Newcastle-based lender encouraged hopes of a rescue for the group, which was forced to seek emergency funding from the Bank of England last month. The news comes only days after Northern Rock extended funding guarantees from the Treasury to cover the deposits of new savers, amid reports of potential interest from private equity bidders - including alleged front-runner JC Flowers - and a ?10bn loan for the company from Citigroup.
Northern Rock's share price surged 32 per cent yesterday, less than two weeks after reaching an all-time low of 132.1p, and closed last night at 273??p, its highest level for over three weeks, returning the company to a stock market value of more than ?1bn. SRM Global, which paid 199p a share for the latest addition to its holding yesterday, declined to comment. The company joins another hedge fund, RAB Capital, as a significant shareholder in the troubled mortgage lender. RAB took a 6.7 per cent stake in the business late last month.
The development, as well as the recent speculation that JC Flowers had raised ?15bn to bid for Northern Rock, was hailed as "positive" by the Northern Rock Shareholders' Action Group. However, chairman Roger Lawson re-issued his warning that the company must not be sold off too cheaply because of its current troubles. A petition launched by shareholders in opposition to the sale and break-up of the lender last night had 969 signatures.
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