Gartmore has fired the starting gun on a mid-December flotation on the London Stock Exchange that is likely to value one of Britain’s best-known fund managers at about £1 billion.

Jeff Meyer, Gartmore’s chief executive, said that Gartmore planned to use the funds raised in the initial public offering (IPO) to reduce the group’s debt to £150 million. He said that, once floated, Gartmore would be able to use its shares to attract new staff and to embark on acquisitions.

Mr Meyer said that Gartmore would be aggressive about buying mutual funds and would snap up British hedge funds. It is understood that Gartmore, which tried unsuccessfully to float in 2007, plans to raise between £250 million and £275 million by floating between 30 per cent and 50 per cent of the company, which is half-owned by Hellman & Friedman, the American private equity company. Gartmore’s net debt is about £400 million.

“Back in 2007, we contemplated an IPO but we cancelled the transaction for obvious reasons, due to the credit crisis that continued into 2008,” Mr Meyer said. “We’ve been monitoring the situation more recently and there has been a pick-up in valuations, particularly in the US. In September, we began reaching out to investment banks to gauge appetite,” he said. Mr Meyer said that Gartmore was floating before other companies that were planning to list — a pipeline that is expected to be increasingly busy over the coming months.

Mr Meyer added that Hellman & Friedman would remain a substantial shareholder after the flotation and would retain two seats on the board.

Bank of America, Morgan Stanley and UBS have been appointed joint co-ordinators and bookrunners. Citigroup is also acting as a bookrunner. When it first considered listing, Gartmore was aiming for a £1.5 billion valuation. Since then, valuations in the sector have fallen. Insight, which had more than £74 billion in assets under management, was sold for only £250 million this summer by HBOS, its former parent, while Schroders, which has £113.3 billion in assets under management, has a stock market value of £2.7 billion.

Gartmore said that it had £21.8 billion of assets under management on September 30 in mutual funds focused on European retail, alternative funds including equity long-short funds, and segregated accounts managed on behalf of large institutional clients. This is a 34 per cent increase since February.

A successful flotation will crystallise significant gains for Gartmore’s employees, who own 50 per cent of the business. As part of the IPO, employees will sell one fifth of their shares. The remainder will be subject to staggered lock-in arrangements due to expire in 2013.

Total revenue for the nine months to September this year was £207.1 million, Gartmore said.

Full details of the IPO will be included in a prospectus.

Some of the City’s best-known fund managers work for Gartmore, including Roger Guy, manager of the Gartmore European Opportunities fund, who owns an £80 million stake in the business.

Gartmore was bought by Hellman & Friedman for £550 million in May 2006, from Nationwide Mutual, an American financial services group, after the buyout firm outbid Schroders and Henderson, the British fund management groups.

Nationwide, America’s sixth-largest life insurance group, bought Gartmore for £1.03 billion in March 2000 from Royal Bank of Scotland after the latter’s takeover of NatWest, the fund manager’s previous owner.

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