Toscafund Asset Management, the £3.5bn hedge fund chaired by Sir George Mathewson, has lifted its stake in Aberdeen Asset Management above 18%.

Toscafund is led by Martin Hughes, a former banker at Royal Bank of Scotland where Mathewson was chairman, and backed the unsuccessful Virgin consortium which bid for Northern Rock.

Toscafund first emerged as a big holder in Aberdeen in March when it snapped up almost 10% of the shares after they sank to a 30-month low of 117.75p.

A spokesperson said: "There has been a bit of an indiscriminate sell-off in the market, and they see some good opportunities in terms of undervalued companies.

"Aberdeen is one of those, and they are very supportive of management." Toscafund had also built stakes in housebuilders Redrow and Taylor Wimpey.

Last month Toscafund nudged ahead of hedge fund group Lansdowne, which has 11% of Aberdeen.

The two funds now own around 29% of Aberdeen's shares, prompting spec ulation that the stakes might attract potential buyers of the group.

John Duffield, the creator of Jupiter and New Star and long-time sparring partner of Aberdeen's founder and chief executive Martin Gilbert, has regularly been touted as a merger partner.

Aberdeen closed up 3.75p at 136p.