SMALL firms on the stock market are facing a famine of new investment, according to a report out today.

A survey found that fund managers who invest billions in stock market firms are less likely than ever to target their investments at smaller firms.

KPMG Corporate Finance believe that many of the 1,100 plcs with a market value of less than £100 million face difficult choices of either being bought out or having to grow substantially by acquiring or merging with other businesses.

East Lancashire firms capitalised at less than £100 million include Blackburn based Crown Eyeglass, Calderburn and Interlink Foods.

"There is a sword of Damocles hanging over hundreds of smaller quoted companies," said Mike Gabriel, head of KPMG Corporate Finance in the North.

He said many found it difficult to raise money for expansion yet unless they grew the big city institutions were less interested in investing in them.

"Small companies are finding themselves stuck in no-man's land."

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