The Manchester-based group has appointed NatWest Markets, the investment bank, to look at the options for the business though Chris Norman, Three Arrows' founder and owner, says he has yet to make a firm decision.
Three Arrows specialises in credit hire and repair. After an accident, the company directs the unfortunate driver to a garage, provides them with a hire car while their vehicle is being repaired and then chases up the claim with the offending driver's insurance company.
A float has been made more likely by the success of Helphire, a similar business that floated in March.
Since coming to the market at 100p Helphire's share price has soared, hitting a new high of 292p last week.
Mr Norman said that until now the company's growth had been funded from its own resources.
"We have very little bank borrowings," he said.
But he pointed out that raising funds on the stock market would be necessary if the company decided to increase its rate of growth and expand the credit repair side of the business.
The latter is particularly cash-hungry because the company tends to pay garages for repairs promptly, while it frequently has to wait several months for insurance companies to cough up.
However, increased competition means credit hire and repair companies have no option but to offer the service to garages in order to get them sign up.
"You have to offer it, it's the only way you'll get the business," Mr Norman said.
Helphire, which is forecast to make a pretax profit of pounds 2.5m in the year to March 1998, has a market value pounds 47.6m.
But Three Arrows is larger and would be able to command a heftier price tag. In the year to August 1997 the company made pretax profits of pounds 6m on turnover of pounds 20m.Reuse content