Bank of Scotland has sold its 24.72 per cent shareholding in housebuilding group McInerney, making a profit of nearly €18.5 million in the process.

The block of around eight million shares was sold at a price of €2.75 per share yesterday. The investment was originally made in December 1996 at a price of €0.44 per share.

Markets sources said the bulk of the shares were placed with a number of financial institutions although senior management at the company are also believed to have taken part in the placing.

McInerney shares have performed strongly this year, gaining 37 per cent as they outperformed the market. They closed last night at €2.95, up 30 cents on the day.

"At a 6.25 multiple return on our initial investment, our decision to invest and become involved in the company has been extremely well justified," said Mr Tom Kirwan of ICC Venture Capital, which is part of the Bank of Scotland Group.

The decision by senior management to buy shares is likely to fuel speculation that the company may be the latest firm to join the growing ranks of those departing the stock market via the management buyout route.

With strong cashflow and readily realisable assets, McInerney, which trades on a low multiple, has been seen as a strong take-private candidate.

Bank of Scotland's decision to sell shares in the company follows that of Mr Dan McInerney senior who sold more than half his stake in the listed developer last month.

Mr McInerney, who is no longer on the board of the company founded by his father in 1909, sold more than one million shares into the market, earning him up to €2.4 million.

The company, which has housebuilding operations in Britain and Ireland and is developing and managing a leisure resort in Spain, recorded its seventh year of profit growth in 2002.

It reported a 14 per cent rise in pre-tax profits to €20.6 million, while turnover rose to €258 million from €185 million.