JC FLOWERS, the private equity firm, yesterday withdrew its bid for the futures brokerage business of Refco, as five other suitors joined the race and pushed the purchase price up by nearly $100 million (£56 million).

The firm, led by the former Goldman Sachs banker Christopher Flowers, withdrew its bid after an American bankruptcy judge said that he would approve the unit’s proposed sale to Flowers for $768 million only if Flowers sharply reduced a break-up fee.

Interactive Brokers Group now has the highest known offer after it raised its bid yesterday to about $858 million.

The raised offer aimed to top a bid by Ronald Burkle, the billionaire investor and a friend of Bill Clinton, who has teamed up with the Government of Dubai to make an $828 million ($448 million) bid.

The prospect of a heated auction for Refco’s assets was good news for creditors, who packed a New York bankruptcy court yesterday in an effort to find out how much, if anything, of the $16.5 billion that they are owed will be paid back.

Man Group, the British brokerage that only a week ago declared that it was not in talks about buying part of Refco, hinted that it could yet make a bid for all or part of the group, suggesting that the auction is far from over. Man Financial is considering a $1 billion-plus bid for Refco.

Last Monday Man Group, Man Financial’s parent, responded to market rumour that it was about to bid for Refco by denying that it was in talks.

However, sources close to Man Group last night told The Times “a lot had changed” in the past seven days, which has led to Man registering interest in bidding for either the regulated futures trading arm of Refco or the whole company.

It is estimated that a bid for all of Refco would be worth in excess of $1 billion, while more than $830 million would be needed to make a knockout bid for the futures business.

Refco was, until October 10, the world’s largest commodities brokerage, but it imploded when Phillip Bennett, its former chief executive, was arrested for securities fraud after it was alleged he had hidden $430 million of debt from investors. Mr Bennett denies wrongdoing.

Refco filed for bankruptcy on October 17 and until yesterday had received only one firm bid for its regulated futures business.

Court papers reveal that Mr Burkle’s bid was made through his Yucaipa investment company in conjunction with Dubai Investment Group, an American company that represents the Government of Dubai.

Mr Burkle, 52, is a self-made billionaire who began his career as a supermarket bagger.

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