MICHAEL GRADE, the BBC Chairman, has emerged as the front-runner in the battle to buy Andrew Lloyd Webber’s intellectual property estate for more than £200 million after his chief rival dropped out of the auction, The Times has learnt.

Spectrum Equity Investors, an American venture capital firm, pulled out of discussions to buy the rights for musicals such as Cats and The Phantom of the Opera after more than four months.

It is understood that Spectrum, which specialises in media and telecoms investments, had grown frustrated with the slow pace of the talks and the uncertainty surrounding whether Lord Lloyd- Webber of Sydmonton ultimately would be willing to part with his intellectual property estate.

Mr Grade, who has teamed up with Michael Linnit, the theatrical agent, to bid for Lord Lloyd-Webber’s Really Useful Group, is thought to be the only remaining bidder. However, a source close to the auction insisted that at least one other bidder remained in the auction, which is being managed by Ingenious Media, the advisory firm.

Mr Grade has offered more than £200 million to buy Lord Lloyd-Webber’s intellectual property rights, which also include the musicals Evita and The Woman in White. His financial backers include Grant Gazdig, a former colleague of Robin Saunders, the City dealmaker, who now heads Access Capital, a private equity firm.

If he wins the auction for the business, Mr Grade is expected to act as non-executive chairman, while Mr Linnit would run the company.

Mr Grade is also bidding to buy the eight West End theatres that Lord Lloyd-Webber owns jointly with Bridgepoint, the private equity firm. Several parties are thought to still be in the running in that auction, which is being managed separately.

Mr Grade is offering a total of about £290 million for the theatres and the intellectual property.

The theatres, which trade as the Really Useful Theatre Group, include the London Palladium, the Theatre Royal Drury Lane, the Adelphi and Her Majesty’s Theatre.

Lord Lloyd-Webber bought his theatre empire for £87.5 million in 2000, but has always been more interested in the creative rather than the managerial side of the business. He has not commented on the reasons behind the sale of the theatres, but insiders say that he wanted to spend more time composing while the business had been overshadowed by pressing need to refurbish the ageing theatres.

The disposals, should they go ahead, would follow the £11 million sale of four of the Really Useful Theatre Group’s theatres in July. The threatres — the Apollo, the Duchess, the Lyric and the Garrick — were sold to Max Weitzenhoffer, the American impresario. Mr Weitzenhoffer said when he bought the playhouses that he was seduced by their magic. A multimillionaire philanthropist, he is best known for producing musicals such as Aspects of Love in New York and plays such as Feelgood and One Few Over the Cuckoo’s Nest in London.

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