FINANCIER Dermot Desmond's, International Investment and Underwriting has emerged as a major shareholder the Dublin based engineering group Unidare.

IIU has disclosed that it acquired 500,000 shares on Friday of last week, the day after Unidare warned that profits in the current year would be lower than the market had been expecting.

IIU took advantage of the sharp fall in Unidare shares the day after the profits warning and apparently picked up the 500,000 shares at 220p and 225p each. This was almost 70p below the prices before the Unidare annual general meeting at which chairman Mr Jim Culliton's issued the warning about current trading.

With that purchase of 500,000 shares, IIU's shareholding in Unidare was increased to 1.14 million shares or 5.9 per cent of the total equity.

This is the third time in a month that Mr Desmond's investment company has invested in Irish engineering companies. Last month, it emerged that IIU had built up shareholdings of 3.3 per cent in engineering and shipping group Jones and 3.9 per cent in radiator and plastics group Barlo.

No spokesman for IIU or Unidare could be contacted last night, but the recent pattern of investments suggests that IIU has a strategy of buying into companies which are currently performing poorly, but have the capacity to improve their performance.

All three companies in which IIU has recently invested have issued profits warnings in recent years, some more than once, and all three shares are currently trading at historically low levels, in or around net asset value.

IIU may have built up a 5.4 per stake in Unidare, but it is still one of the smaller institutional investors in the company. At the end of 1995, Unidare had 10 institutions holding over 3 per cent of the company. AIB is by far the largest shareholder with over 17 per cent while others with equity holdings larger than IIU include Irish Life, Mercury, Ulster Bank, IBI, and New Ireland.

Friends Provident has also been a recent buyer of Unidare shares and its stake in the engineering group has risen 3.3 per cent to 5.04 per cent since the beginning of the year.