Venture capitalists circle ailing Kingfisher

Private equity giants, including Kohlberg Kravis Roberts, are running the slide rules over DIY giant Kingfisher, it is understood.

No approach has been made, but Wednesday's profit warning from Kingfisher may increase the venture capitalists' interest.

Post-profit warning, any offer would be likely to come in at between£6 billion and£7 billion. However, the venture capitalists are nervous about the sheer scale of such a deal.

Kingfisher, led by chief executive Gerry Murphy, has been criticised for losing focus at its UK market-leading B&Q chain and for concentrating on cost efficiency rather than sales.

One source with close connections to private equity said: 'There are one or two [private equity firms] looking at it, because where does it go next?'

However, Kingfisher's extensive overseas businesses in countries including France and China - where expansion is being accelerated - would complicate venture capitalists' calculations. They would also need to address associated complexities such as currency risk.

InvestecanalystMark Charnock said Kingfisher had attributes that would appeal to a buyer. He estimated property assets, for instance, to be worth about£2.4 billion.

However, an approach might trigger a pounce by Home Depot, long viewed as a potential buyer of Kingfisher. Charnock said: 'If there's a deal to be done, you'd think it would probably be someone like Home Depot.'

On Wednesday, Kingfisher disclosed that first-quarter retail profit was likely to be down 15 per cent.