Loosely speaking, it looks as though the prospective takeover of Paragon, a buy-to-let mortgage lender, could get about as messy as a Ford-GM balance sheet. Now that private-equity heavyweight Blackstone is sniffing around, will rival TPG Capital step up to the plate? And what, exactly, is the lure after TPG walked away from a similar deal only weeks ago?

TPG Capital, the US private equity group, is considering a bid for Paragon, a specialist mortgage lender, less than three weeks after it infuriated the City by pulling out of a £179m capital injection for Bradford & Bingley.

Paragon’s shares rose 31 per cent to 110p on Tuesday after the company said it had received a number of approaches and was exploring various options. Blackstone is one interested party.

The share price of the UK’s third largest buy-to-let mortgage lender has fallen 93 per cent over the past year and analysts believe Paragon could be worth upwards of 120p per share.

Private equity companies are still keen to put money into the mortgage market because they believe financial turmoil is throwing up possible bargains.

TPG declined to comment. People close to the buy-out house said it was “generally interested” in Paragon and monitoring the situation. It has not asked for an information memorandum to be sent out to other potential bidders.

An insider said: “Once bitten, twice shy. There clearly can’t afford to be anything wrong on this one and it will be considered very carefully by TPG before making a move.”

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