South African banking group Investec (LON:INVP) said this morning that it had made a preliminary approach over a potential share offer for smaller rival Evolution (LON:EVG). The news comes a day after Evolution confirmed that it had received an approach. Shares in the mid-market investment banking and private client investment management group gained 1 percent to leave them trading at 80.5p.

Investec said its approach was made subject to a number of pre-conditions including, obtaining a unanimous recommendation from the Evolution Board and the satisfactory completion of certain due diligence requirements. In its statement yesterday, Evolution said the approach was at a very early stage and the group’s board was “far from certain” that it would ultimately result in an offer being made.

Last week, Evolution reported that half-year group income had fallen by £4.5 million to £51.6 million on last year but that pre-tax profits had risen by £1.3 million to £4.3 million. Broker Peel Hunt observed that a better than expected result in Evolution’s Securities business had helped the interims beat expectations. However, it said that the group’s Williams de Broe Wealth Management division remained the key driver going forward. Peel Hunt retained a buy rating on the stock with a price target of 86p. “The share price has rallied c20% since the end of June, but we see further upside,” it said.

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