First the mortgage, then the smart new kitchen: Martin Hughes, the activist hedge fund manager backing Sir Richard Branson’s bid for Northern Rock, has taken a 6.68 per cent stake in Smallbone, the luxury kitchen company.

Mr Hughes is thought to have spent about £1.4 million on 1.5 million shares in the AIM-listed company through Toscafield, his personal investment fund. Toscafund, the hedge fund manager led by Mr Hughes, is one of a team lined up to back Sir Richard's £1 billion bid for a 50 per cent share in Northern Rock, the bank.

A spokesman for Mr Hughes said that he had bought the shares as “a long-term investment . . . the investment is not connected with Toscafund’s activities”. Mr Hughes is understood to have bought his stake in part from Mark and Cynthia Wil-kinson, two of Smallbone’s directors.

Charles Smallbone, the kitchen company’s chairman and chief executive, said: “We are delighted, knowing what a shrewd investor he is, that Mr Hughes has bought a significant stake in our business.”

Times Recommends

• Minister in talks with Saudis to protect creditors
• Premier Inn hits back in £29-a-room row
• Bankers hit back at 'populist' bonus supertax