A bidding war could erupt for Barclays' iShares fund management operation as the bank solicits new offers from private equity and trade bidders before making a decision on whether to sell the business to CVC.

Several parties are understood to have lodged expressions of interest. Apax, Bain Capital and BC Partners, the owner of Foxtons, the struggling estate agency chain, could all be interested in the fund manager.

CVC has submitted a binding £3billion bid for iShares, but under the terms of the deal, Barclays is entitled to a so-called go-shop period where it has 45 days in which to find a bidder who would offer more.

The go-shop window does not expire until June 18 and sources close to the process said that all talks were at a very early stage.

Further, under CVC's agreement, the private equity group must be allowed the chance to match any rival offer. If Barclays sells iShares to another bidder, it would have to pay CVC a break fee of £175million.

It is likely that the £2.1billion of debt funding that Barclays would provide to CVC will be available to other bidders on similar terms. This would remove the problem of the lack of debt finance with which all private equity bidders are struggling.

Both Hellman & Friedman and Colony Capital, the American private equity groups, alongside the London-based Apax, looked at iShares before Barclays appointed CVC as a preferred bidder, but this is the first time that the name of BC Partners has been linked with the sale of the fund man-ager.

BC Partners raised a €5.9billion fund in 2005, of which 55 per cent is already spent. The minimum £1.2billion equity cheque that it would have to write to pay for iShares would wipe out a huge proportion of what is left of the fund, so the deal could be too big for BC Partners alone.

However, the private equity firm has previously tied up with rivals to bid for huge financial services assets. This year, Apollo Capital Management, of America, and BC Partners made a joint bid for a majority stake in Royal Bank of Scotland's insurance business that would have valued the division at £5billion.

Barclays, whose share price has trebled since January, will hope to tempt more bidders to increase the asking price. The bank will not require fully funded firm offers until the end of the go-shop period.

Barclays, CVC and BC Capital all declined to comment.

Also keeping silent yesterday was HSBC, which today will unveil its interim management statement and US first-quarter results. The bank is expected to say that at group level the economic outlook is as uncertain as it was when its rights issue was completed in January.

HSBC is also expected to report that its Chinese and Indian operations will outperform those in the rest of the world, but most attention will be focused on its loss-making American business that has been heavily criticised by Knight Vinke, the activist investor.

The bank is expected to unveil a new series of writedowns in its American mortgage business, which it is running off, although losses will be slightly better than in the last quarter.

However, losses at its US credit card and car loans business will worsen as the American economy deteriorates and consumer debt defaults rise. HSBC bought Household, its US business, in 2002 for £10billion, but the poor performance of the unit, which lends to consumers on low incomes, has continued to affect the bank.

What's at stake

£3bn

Price CVC has agreed to pay for iShares

£2.1bn

The amount Barclays will lend to buyers willing to take iShares off its hands

£150m

The windfall that 200 Barclays bankers will share if the sale goes through

Source: Times research

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