Icap is in talks with Plus Markets Group to acquire the distressed small cap market's equities exchange business "for a nominal sum".
Icap's interest comes days after Plus Markets announced plans to wind down its ailing business after failing to find a suitable takeover partner.
In a brief statement released to the London Stock Exchange, Plus confirms market speculation that a deal with Icap may be in the offing:
"The Group can confirm that it is in talks with Icap plc that may lead to the disposal of its subsidiary company PLUS Stock Exchange plc ("PLUS-SX"), the cash equities recognised investment exchange for a nominal amount due to the loss making nature of PLUS-SX. As indicated in previous announcements, the board believe that this would be in the best interests of shareholders to preserve remaining shareholder value. There can, however, be no certainty that a transaction will complete."
Icap's primary interest is in the acquisition of Plus' coveted Recognised Investment Exchange status, although the inter-dealer broker is understood to be committed to preserving the quotation of the 156 small companies listed on the Exchange.
The Quoted Companies Alliance, an independent membership organisation that champions the needs of small to mid-size quoted companies, yesterday called on the UK Government to urgently review whether the UK's primary equity markets are "fit for purpose".
In a letter to the Chancellor George Osborne and Business Secretary Vince Cable, the Alliance stressed that the imminent closure of Plus indicates the need for a joined-up policy for helping small and mid-size quoted companies raise money through primary equity markets.
Tim Ward, chief executive of the lobby group, comments: "The closure of the Plus-quoted market means that over 150 small and mid-size quoted companies are going to need to find alternative ways to raise finance. At a time when banks are reluctant to lend, this is no easy task.
"Billions of taxpayers' money has been spent on bank funding. Now is the time to look at equity and the important role this plays in financing growing companies."