As part of the sale of its life insurance division to Fidelity in February FMG received just over 8% of the company’s stock but the group’s chief executive, Gordon Smith, said a 10% holding would be “more strategic”.

“In discussions with the board we agreed a 10% holding would be realistic and enable us to take part in the future of the business,” Smith said. “We’re showing our faith in Fidelity.”

In April FMG also began selling Fidelity products through its network of eight employed insurance advisers.

Milton Jennings, Fidelity chief, said the group had co-operated with FMG in its latest offer and squashed any suggestion a full takeover was underway.

“We’re keen to work with FMG - we’re both New Zealand-owned companies,” Jennings said. “But the shareholding of Fidelity is so tightly-held that a takeover would be difficult.”

Fidelity is 53%-owned by its founder, Gordon Watson, another substantial shareholder, Greg Burgess, owns 17% of the company with the rest split between about 50 other shareholders.

“I think the FMG offer has created some activity and another, higher offer might be on the table soon,” Jennings said. “But they’re really only fighting for about 2% of the company.”

A Fidelity shareholder, who declined to be named, said FMG’s $72 per share offer was too low.

“With Fidelity’s expected profit of $14 million this values the company at a p/e ratio of just under seven, approximately half of the NZX average,” the shareholder said. “I think this is just the first crack at Fidelity.”

He said Fidelity’s 8% share of New Zealand’s life insurance market would be attractive to other companies such as AXA and Asteron that are looking for rapid growth.