AMERICAN fund management giant Federated Investors has emerged as one of the frontrunners in the €700m (£550m) auction of Artemis.

Federated is among a clutch of American trade buyers circling the company, put up for sale by Fortis, the Dutch-Belgian bank.

Although the offers fall a long way short of the €1 billion that Artemis had been expected to raise, it is thought that a deal will be announced within weeks.

UBS is handling the auction of the UK fund manager, inherited by Fortis following its acquisition of parts of ABN Amro.

Franklin Templeton and Putnam are also understood to have looked at an offer for the Edinburgh-based business. Company founders John Dodd and Mark Tyndall are expected to be offered lucrative contracts by any successful bidder to remain with the firm.

Dodd and Tyndall had considered a management buy-out of the business, which now has almost £16 billion in funds under management.

Federated increased its funds under management by 35% last year to almost $340 billion (£172 billion). The group saw huge inflows into its money market funds.

Industry sources say the firm has a track record of buying companies but allowing them to retain management independence. It would be expected to build the Artemis brand, which has been bolstered by its “profit hunter” advertising campaigns.

Times Recommends

• Lies and cover-up at MG Rover exposed by report
• High oil prices push manufacturing costs up
• Primark founder steps down as chief executive