Founder Singh springs £700m offer for New Look fashion chain

New Look's founder yesterday bowed to shareholder pressure and raised his indicative offer for the fashion retailer he founded more than three decades ago to £700m.

Tom Singh, whose family owns 28 per cent of the company, agreed to raise his indicative bid from 330p after the retailer's independent directors refused to grant his private equity backers - Permira and Apax Partners - access to the group's books. John Grieves, the company's non-executive chairman and head of an independent committee appointed to assess the bid, said: "We think this is at a price which justifies them doing due diligence."

The company's executive team, led by Stephen Sunnucks, is working with Mr Singh on his offer, although Mr Grieves insisted this would not deter rival bidders from entering the fray. "If anyone else approaches us, they will have equal access to the directors," Mr Grieves said.

New Look shares rose 12p to 336p on confirmation of Mr Singh's interest, suggesting the market does not think another bid is likely to emerge.

Sources close to Mr Singh, who declared in July that he was exploring strategic options for his stake, said he had decided to press ahead with an offer because it was the best way to enable his family to realise some value from their shareholding in the company. At 348p-per-share, the Singh family's stake is worth £195m. It was not clear yesterday how much of the proceeds Mr Singh planned to reinvest if he makes a formal offer.

New Look, which was floated on Mr Singh's second attempt in 1998 at 165p per share, said the proposal was subject to due diligence and financing, warning that there was "no certainty" of any firm offer, or of its terms. Due diligence is expected to take at least two months, making an offer unlikely this side of Christmas.

Mr Grieves denied that the process would disrupt trading during the most important time of the year for the womenswear specialist. "They [the management team] are a very focused group. I am quite confident they will be able to cope," he said.

Although New Look had a trading blip earlier this year when the management admitted it had sold too many cheap tops, it said recently that underlying sales had recovered thanks to its strong autumn fashion ranges.

Analysts were divided about the level of Mr Singh's offer, which represents a record high for the company's shares and his chances of success. "It does not seem likely that anyone else will make a bid," Richard Ratner, at Seymour Pierce, said. However analysts at Numis Securities said the company was worth at least 375p per share. "We believe there are few stocks in the retail sector with the same prospects for growth going forward," they said.