The individual who bought 3.7 per cent of Gresham Hotel Group through an Israeli bank last week is believed to have raised his holding to about 10 per cent of the company.

A development of this nature will not be welcomed by Precinct, the consortium of three businessmen who want to take over Gresham.

In effect, it would leave a large portion of the shares Precinct needs to support its bid in the hands of an unknown party.

This would come in addition to the 28.3 per cent of Gresham held by Red Sea, the Israeli hotel group that has already said it will not support the Precinct takeover.

The consortium will also find it difficult to rely on the support of Monaco-based businessman Mr Ian Ilsey who owns a further 4.4 per cent of the company.

If, like Red Sea, Mr Ilsley and the new shareholder - Mr Chanrai Balram - decide to oppose the Precinct bid, it would leave the consortium struggling to achieve the 54 per cent approval rate it requires to guarantee success. Precinct has offered €1.30 per share for Gresham at this 54 per cent level, rising to €1.35 if the acceptance rate can be lifted to 80 per cent.

Market sources suggested last night that the emergence of a large block opposing both offers could, if this occurs, be designed to force a higher bid out of Precinct.

It emerged yesterday that Mr Balram, who is believed to be an Indian businessman based in Hong Kong, bought 1.6 million Gresham shares at €1.29 through the Discount Bank of Israel on Tuesday. This purchase, which was notified to the Stock Exchange, lifted his holding to 5.8 per cent.

It is now believed that Mr Balram bought a further 4.9 per cent of Gresham at €1.34 on the same day, although this trade was not handled by the Discount Bank.

A purchase at €1.34 would not generate a profit for Mr Balram even if the higher offer of €1.35 were to kick in, since stamp duty charges would absorb his gain.

The shares are understood to have been sold by Pendragon, a hedge fund.

Another part of Mr Balram's holding is believed to have been purchased in the form of contracts for difference - derivative instruments that bet on a share rising or falling - from Cantor Fitzgerald. Such contracts traditionally carry a higher element of risk than normal shareholdings.

Mr Balram's identity first became known last Friday after his trades had come to the attention of the Takeover Panel.

It is thought the panel was attempting to establish whether his stake-building could have a link with Red Sea, thus making the two concert parties.

If a link between Red Sea and Mr Balram were to be proven, it could force them to either sell their shares or make an offer higher than the €1.35 that has already been flagged by the Precinct consortium.

Precinct sent its offer document to Gresham shareholders earlier this week, setting a first closing date for acceptance of June 15th. Gresham shares closed unchanged at €1.30 last night.