US raider builds Jarvis stake

AMERICAN raider K Capital has built up a near-20% stake in deeply-troubled rail engineer Jarvis, which has until the end of this month to satisfy its bankers it can continue as a going concern.

It has emerged that K Capital, a Boston-based self-styled investor in undervalued European stocks, bought 7.6m Jarvis shares on Friday, the day Jarvis issued a warning that it was in breach of its banking covenants.

That takes K Capital's holding to 25.5m shares or 17.9% of the company, easily the largest holder of the stock. It is understood shares were bought at around 45p in blocks of about a million.

After the warning, in which Jarvis said its debts had rocketed to £230m and detailed write-offs and exceptional items totalling £196m, its shares plunged 55%. They fell a further 30% yesterday but, despite heavy trading, were steadier today, 1/4p higher at 24 1/4p.

Even after the precipitous fall in Jarvis shares, fuelled by serious problems in a range of Private Finance Initiative funded school building projects, a flock of City institutions have been left holding substantial blocks of shares.

These include Morgan Stanley, Goldman Sachs, Jupiter Asset Management, Legal & General and New Star Asset Management.

K Capital's intentions have not been made clear but it has a track record of agitating for management change, most recently at the Dutch retailer Vendex. The investor also retains an 8% stake in AWG, the East Anglian water group.