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IFAs are now play for spec sits funds

IFA firms are now seen as a special investment situation by fund managers such as Merrill Lynch which has taken a 3.2 per cent stake in Inter-Alliance.

The alpha specialist situations fund took the stake the day after Evolution Group&#39s investment in Inter-Alliance returned a £13m profit in seven weeks. Evolution gave Inter-Alliance a convertible loan that it turned into a 22 per cent stake in the company last week.

CP121 and the possible relaxation of the better than best rule have alerted investors to the IFA sector potential.

The share price turn-round at Inter-Alliance is also understood to be in part due to confidence in the new management headed by chairman and chief executive Keith Carby.

Numis Securities analyst Justin Bates says: “The key to the IFA sector is depolarisation. Does depolarisation mean investors think IFAs are tasty morsels for life companies?”

Bates Investment Services head of research James Dalby says: “It will be interesting to see if there are any more special situations funds targeting the IFA sector.”

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