Electra soars 20% on pounds 1bn bid by 3i

SHARES IN Electra Investment Trust jumped 20 per cent yesterday after the company confirmed it had received an unsolicited takeover approach from 3i, which could create a pounds 4.4bn venture capital group.

Electra shares added 119p to close at 682.5p, valuing the company at pounds 975.4m. 3i, the UK's biggest venture capital company, is reportedly offering 700p - more than pounds 1bn.

Executives at Electra were yesterday locked in talks with 3i, and a fuller announcement is expected this week. Shares in 3i gained 14p to close at 631p.

A deal would create one of the largest venture capital companies in Europe, where the industry is estimated to be worth pounds 40bn a year.

A takeover of Electra would complement 3i's strengths in the UK, where it specialises in management buyouts of smaller companies. 3i invested pounds 448m in 267 businesses in the first half of 1998. Electra has specialised in larger acquisitions and is expanding in Europe, where venture capital is in demand to fund restructurings and privatisations.

Sources say executives are concerned about the impact of a takeover on staff at Electra Fleming, the investment manager that runs the investment trust's portfolio. Fund managers there are paid substantially more than at 3i, and some may leave if a takeover is agreed.

Analysts said institutional shareholders would probably favour the deal.