Cenkos approaches Fairfax with a view to a possible takeover

But a quick deal is unlikely as the investment boutique is itself looking to buy listed rival Astaire
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The Independent Online

Cenkos, the City broker founded by racehorse owner Andy Stewart, is believed to have approached Fairfax, the investment boutique, about a possible takeover.

It's thought that Singer Capital, the broker which emerged from the ashes of Kaupthing Singer & Friedlander following the Iceland crisis, has also sounded out parties about the possibility of a deal.

AIM-listed Cenkos, which has been run by chief executive Simon Melling since July last year, is believed to have declared an interest in Fairfax recently, although it's unlikely a deal will be struck in the short term. Any potential bid would be complicated by the fact that Fairfax is itself looking to buy its listed rival Astaire.

Fairfax, led by Stefan Allesch- Taylor, posted an operating loss of £3.7m for the year to the end of 2008, according to the latest filings at Companies House. Sources close to the group indicated the firm was "not for sale", and emphasised that the company's management was instead concentrating on the potential acquisition of Astaire and other future deals.

Last month, the Financial Services Authority (FSA) said it was investigating Astaire over a £1.4m black hole in its accounts.

The stockbroker admitted discovering "potentially irrecoverable debtor balances" during an audit of its subsidiary, Rowan Dartington, earlier in the year.

The investigation, which prompted the suspension of Astaire's shares, now threatens to derail the Edward Vandyk-led firm's planned £3.6m takeover of broker Hoodless Brennan.

Cenkos, which has in recent years launched ultimately abortive bids to buy Arden Partners and Close Brothers, is believed to have turned its attentions to Fairfax after talks to buy the stockbroker JM Finn ended earlier in the year.

Last week JM Finn sold its 50 per cent stake in FinnCap, the corporate finance arm of the stockbroker, which is run by chief executive Sam Smith.

Smith and her team bought the remaining stake in the firm, which is now wholly owned by its management. As part of the deal, FinnCap's management have all sold their holdings in the former parent company.

FinnCap, which specialises in advising small companies, recently parachuted in Jon Moulton, the private equity veteran, as chairman.

News of the continued consolidation in the City broking sector comes as the sale of Peel Hunt by the Belgian bank KBC continues to meander on.

A source close to the sale said that a few groups remained in the frame to buy the business, including its management. "KBC has plenty on its plate at the moment, so little old Peel Hunt doesn't really figure that highly," said the source.

A spokesman for Fairfax declined to comment, while a spokesman for Cenkos did not return calls.