THE emergence of an aggressive US value investor with a debut 4.4 per cent stake in London Scottish Bank fuelled speculation over the future of the lender’s debt collection arm.

Steel Partners is a name guaranteed to turn heads when it appears on a share register, and yesterday’s declaration that it had acquired 6.2 million shares in LSB proved no exception. The New York fund was seen as instrumental in putting packing specialist API Group into play earlier this year. It is also the biggest shareholder in Uniq, with 12 per cent, and owns 7.1 per cent and 7.4 per cent of Renold and Lavendon Group respectively.

What has drawn it to the UK financial services sector for the first time is unclear, but dealers speculate that Steel may seek to unlock value from Robinson Way, LSB’s debt collection division, forecast to account for more than half this year’s profits. Although it has performed strongly, fears over rising bad debts and lower loan growth in LSB’s consumer finance division have held back its shares, which rose ¼p at 81¼p. The FTSE 250 lost 22.0 at 8,476.0.

House of Fraser fell 3½p at 111p as Evolution Securities moved from add to reduce with a lowered 105p target, against 110p previously, citing scepticism that a rumoured bid from Debenhams will materialise. Nick Bubb, analyst, hears that despite holding two one-day sales, like-for-like sales at the store operator are still under a lot of pressure, implying downside risk to profit forecasts.

Northgate Information Solutions put on 3½p at 92½p as Morgan Stanley nudged its price target up from 90p to 95p, citing the receding integration risk surrounding Sx3, bought from Viridian this year for £143 million. Parity Group held steady at 7¼p as Spearhead, a Florida-based IT consultant with operations in Canada, emerged as the buyer of the 31.2 million shares, or 10.8 per cent stake, that changed hands last Friday at 8p, nearly twice the prevailing price. Dicom Group was pegged at 212p, despite suggestions from Shore Capital that trading at the software developer’s Neurascript division is better than expected.

Homebuy, floated last year at 80p, rose 2p to 229½p as KBC Peel Hunt placed 2.5 million shares, or 7.5 per cent, on behalf of founders. The sellers were said to include Phil Harwood, the chief executive, and the Hargrave Foundation.

SMC Group rose 9p at 97p on unveiling contract wins worth £5 million in fee income.

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