Shares in financial services group IFG rose more than 4 per cent yesterday after it said it is in advanced talks to buy a specialist corporate services company for £10.5 million (€15.5 million).

The Dublin-listed company issued a statement to the stock exchange saying the discussions "may or may not" lead to it acquiring another company, which provides similar off-shore corporate trust services to its own international division.

If completed, the acquisition will be funded jointly from existing resources and the proceeds of the sale of 3.2 million IFG shares and the conversion of a further 911,226 units currently held as treasury shares.

Chief executive Mark Bourke was unavailable to elaborate on the plans, but even without knowing the identity of the bid candidate, analysts were positive on the news.

"This is an area with great growth potential," said one analyst of the off-shore corporate trust business.

In the first half of this year it accounted for about 37 per cent of IFG's operating profits, and over the past five years has seen annual growth of 20 per cent.

Last December IFG acquired a Jersey-based trust company from Bank of Scotland for £6.6 million.

The proposed deal comes at a time of increased consolidation in the sector, as the larger players look to exit it over conflict of interest-related concerns and the smaller players get squeezed out on cost grounds.

At the time of the Bank of Scotland acquisition, IFG said the bank's European and British client base would complement the US and Asian client base of IFG's own operation.

It is unclear where the potential acquisition is located, but given the nature of the business it could be anywhere.