NewMediaSpark, Europe's largest quoted internet and seed investment firm, said the purchase gave it an edge by bolstering its balance sheet as well as offering a window to the strategically important Indian market, on which Softtechnet is particularly focused.

The offer, equivalent to around 24p for each Softtechnet share, represents a 65% premium over Thursday's closing price of 14.5p.

Yesterday, Softtechnet shares climbed 3.5p to close at 18p, while NewMediaSpark eased 6.5p to 53.5p.

The combined group will have more than £145m in its investment portfolio and cash resources of more than £45m.

"The specialist internet and technology strategy of Spark complements our strategy of pre-IPO investments, resulting in a combined ability to nurture investee companies from inception to IPO [initial public offering]," said Softtechnet chief executive Tony Sarin.

NewMediaSpark has offered four new shares and one new warrant for every 10 shares in Softtechnet, which was only founded in January. It floated on London's Alternative Investment Market in March.

NewMediaSpark also announced a maiden pre-tax profit of £2.85m for the period from July 26 1999 to March 31.

Softtechnet.com is an internet investment firm with a particular focus on investments in India's burgeoning internet sector. Shekhar Kapur, the Indian film director behind the camera for the Oscar-nominated film Elizabeth, is a board member.

The company raised around £26m through its Aim flotation in March.