A 10 per cent share price drop is an unusual reaction to the announcement of a bid approach. However, this is what happened at Informa this morning as it emerged that the exhibitions giant had been approached by a private equity consortium led by Providence.

The share price fall followed last night’s announcement that merger talks with United Business Media had collapsed and concerns that a private equity deal would be difficult to achieve in the current market.

There is increasing concern about Informa’s high debt levels - the key reason for Informa’s shares falling so much in the past year - and the merger with UBM was seen as an immediate solution. However, the market is less certain about whether a private equity deal will work, with many doubting private equity's ability to raise the £3.5 billion for an Informa takeout.

It is understood that even the private equity groups involved in the Informa approach are uncertain about whether funding will be possible.

However, what may stand in Providence’s favour when trying to attract private equity groups is Informa’s low dependence on advertising. Lending banks have particular concerns about advertiser-funded businesses in a challenging ad market. Informa’s exhibitions business, particularly in emerging markets, is fast expanding.

Even so, refinancing Informa's £1.2 billion of debt will remain the biggest challenge.

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