Warburg had not looked for a buyer after the issue ran into weak institutional interest. The inaction prompted Nomura, the Japanese bank which owns the bookmaker, to take the initiative and sell William Hill to Cinven and CVC, the venture capital groups, for pounds 825m.
The deal was clinched on Saturday afternoon by Guy Hands, head of Nomura's Principal Finance Group, with the help of Schroders, a rival merchant bank.
Mr Hands, who bought William Hill from the ailing conglomerate Brent Walker for pounds 730m in 1997, phoned Cinven from his holiday in Barbados and informed Warburg of the sale minutes before the public announcement.
Warburg was the lead manager of the issue, sharing the pounds 13m total commission with Deutsche Bank, Cazenove and BT Alex.Brown.
Weak support forced an offer price cut to 135p from the original 155p to 175p. The new price, valuing William Hill at pounds 780m including debt, did little to boost City interest in the shares and the float was pulled.
Insiders said Warburg was likely to get some payment from Nomura, "much less" than the original fee. They said the bank did not look for a buyer because it had been hired to carry out the float and not to sell the bookmaker. Warburg declined to comment.
Different action was taken by Dresder Kleinwort Benson in the float of the supermarket chain Somerfield, in August 1996. The broker was twice forced to cut the issue price due to weak institutional demand.
Then Kleinwort Benson approached other potential buyers such as Tesco and Safeway to see if a higher price could be achieved.
In that case, no other bids were forthcoming, which demonstrated that the issue price, even in its reduced form, was the best that could be achieved in the market.