(Bloomberg) -- Bank of Cyprus Holdings Plc rejected three takeover proposals from Lone Star Funds, saying the offers undervalued the island country’s largest lender. 

The Cypriot bank on July 22 rejected a third, improved proposal of 1.51 euros per share from Lone Star, according to a statement from the lender on Friday. Bloomberg News had earlier reported the approach, which was then confirmed by Lone Star.

Under takeover rules, Lone Star has until 5 p.m. on Sept. 30 to announce whether it will make a formal offer. There is no certainty a bid will be made after the three previous proposals, the first of which happened in early May at 1.25 euros per share. 

Bank of Cyprus shares in London rose as much as 23% on Friday. The stock closed up 9.1% in London, giving it a market value of roughly £460 million ($543 million). The lender’s shares in Nicosia rose 3.5% to 1.18 euros, valuing it at 524 million euros. 

“In addition to fundamentally undervaluing the company and its future prospects, the board believes that the proposal from Lone Star does not adequately address the complexities of completing a transaction to acquire Bank of Cyprus, given its strategic importance to Cyprus,” the lender said in Friday’s statement.

Goldman Sachs Group Inc. and HSBC Holdings Plc are advising Bank of Cyprus, according to the statement. 

Dallas-based Lone Star, led by billionaire founder and chairman John Grayken, has a track record of investing in banks, and its portfolio includes Germany’s IKB Deutsche Industriebank AG and Portugal’s Novo Banco SA. 

While many private equity investors have chosen to stay away from banks, which face headwinds from legacy technology systems, regulation and capital requirements, the sector is becoming more attractive as interest rates start to rise. To be sure, some investors remain concerned that future recessions and loan defaults would outweigh rising profits from higher rates.

Bank of Cyprus is the biggest local lender, offering everything from retail and commercial banking to life and general insurance. The company, which can trace its roots back to the late 19th century, faced a heavy restructuring in 2013 in the wake of the Greek debt crisis. 

As part of Cyprus’s 10 billion-euro ($10 billion) rescue package at the time, Bank of Cyprus absorbed its nearest competitor, Cyprus Popular Bank Pcl, and was recapitalized through the conversion of deposits into shares. Existing shareholders were almost completely wiped out, and 21,000 bank clients who had deposits of more than 100,000 euros saw almost half their uninsured savings converted into equity at 1 euro a share.

(Updates with Bank of Cyprus statement)

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