A unit of Travelers Group Inc. and a fund it invests in made a $50 million investment in subprime lender IMC Mortgage Corp. on Wednesday.

Travelers Casualty and Surety Co., an insurance subsidiary, and Greenwich Street Capital Partners II, a merchant banking fund, purchased $50 million of IMC's convertible preferred stock and were given an option to buy another $30 million.

IMC, Tampa, makes nonconforming home equity loans in the United States, Canada, and the United Kingdom. Shares of IMC rose more than 30% on the news, to close Wednesday at $13.50.

Subprime lenders have sought added capital in recent months, after a wave earnings adjustments hurt the whole sector's stock prices.

Though the move is not unusual for Travelers, which has sizable subprime operations, prospective merger partner Citibank has stayed away from the more risky business, analysts noted.

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