ALWAYS eager to help private companies go public, merchant banks are

invariably reluctant to follow that route themselves.

So when Quayle Munro announced plans yesterday for a reverse takeover

and a Stock Exchange listing, neighbouring financiers in Edinburgh's

Charlotte Square were suitably impressed.

No-one could actually remember an independent merchant bank being

floated before. In Scotland they tend to be like British Linen, under

the wing of a banking parent, or still firmly independent as Noble


Quayle Munro has a string of corporate clients, but has raised its

profile recently through major assignments for the Scottish Office. It

has worked on the privatisation of the Scottish Bus Group, advised on

Scottish Enterprise's investment portfolio, and on funding for the Skye


The merchant bank also undertook a review of options for private

sector finance in relation to future organisation of water and sewage

facilities in Scotland for the Scottish Secretary. Currently it has been

advising the Monktonhall mineworkers' consortium on funding.

As one might expect of professionals, Quayle Munro has devised a

thoroughly complex market route. It is merging with East of Scotland

Industrial Investments (ESII) in a reverse takeover, following which a

new company called Quayle Munro Holdings will go for the listing in

early June.

The investment company is worth around #17m, with 75% of the mainly

institutional shareholders already signalling approval of the deal. They

will benefit from #10m of capital being repaid, while Quayle

shareholders will end up with threequarters of the newly-merged company.

It is likely to be capitalised at only #5m, but with a rather higher net

asset value.

ESII was promoted in 1980, largely for unlisted investment, by Chiene

& Tate. When Quayle Munro was formed in 1983 it took over management and

doubled its size, raising #7m in a rights issue and becoming its largest

shareholder with a 14% interest.

Currently it is about 50% liquid but with holdings in Shanks & McEwan

and Secure Trust Group, along with unlisted shares in Exacta, McCowan's,

and Nevis Range Development.

The chairman, David Ross Stewart, said they had been examining a

number of options to ensure an early and substantial payment to

shareholders reflecting the value of liquid assets, also a satisfactory

longer-term solution of the unquoted portfolio.

Mr Stewart is also chairman of Scottish Provident, and is to be

interim chairman of the merged company.

Ian Jones, who will become group chief executive, saw the merger as

''an exciting opportunity'' to create a new Scottish-based listed group,

operating as an integrated investment and merchant banking house.

Co-founder Michael Munro will be a director of the new company, which

will have James Bennett, David Skinner and John Price as non-executive

board members.