Shares in Peregrine Investments Holdings surged 12.5 per cent to HK$7.65 yesterday as news of the company's sale of a stake to Switzerland's Zurich Group was welcomed by investors.
The rise came as Peregrine admitted the recent spate of rumours about the company's potential demise were a major factor behind its haste to seal a deal with Zurich.
Analysts said the deal was a good one for Zurich as the price it paid for a 24.1 per cent stake in Peregrine valued the company at a lot less than other investment banks had recently fetched.
Peregrine's communications director Tom Grimmer said: 'Zurich Group is a huge multinational firm. They are not going to spend US$200 million without doing extensive due diligence.
'They gave us a clean bill of health. That is going to go a long way towards squelching rumours that Peregrine is on its last legs.' Zurich Centre Investments, the private equity arm of the Zurich Group, on Sunday said it would subscribe for a new issue of convertible preference shares in Peregrine at a price that translates to HK$8 per Peregrine share.
Mr Grimmer said the deal had been suggested by the Zurich group only 10 days ago as the two firms were involved in negotiations about setting up a direct investment fund.