Barclays is in exclusive talks to sell its iShares asset management unit to CVC Partners for about 3 billion pounds ($4.3 billion), a person familiar with the situation said on Tuesday.
The sale would not include the securities lending business of San Francisco-based Barclays Global Investors (BGI), the parent of iShares, the source told Reuters.
Barclays will retain a roughly 20 percent exposure to iShares through warrants, the source said.
Barclays shares trimmed earlier gains after the report and by 7:45 a.m. EDT they were at 150 pence, up 0.5 percent but down from 155p before the news.
Barclays declined to comment. It said on Monday talks about the sale of the exchange-traded funds unit were progressing well, alongside news it had rejected an offer to take part in a British government plan to insure risky assets.
Analysts had put the value of iShares at about 3 billion pounds, though bank industry sources had said bidders could be willing to bid near 4 billion pounds.
The option of the warrants could be worth over 500 million pounds on the estimated value of the deal.
Excluding the securities lending business will make the deal less complex with U.S. regulators, the source said.
A second source said one of the other bidders had wanted to include that shared business, which had made it harder to value the business.
It was not immediately clear whether CVC was bidding alone, or whether it was part of a consortium. The private equity house declined to comment.
Goldman Sachs had earlier been mooted as a potential bidder, as were Bain Capital and a consortium of Hellman & Friedman and Apax Partners.
The source said a deal could be reached late this week but could not be more specific about the precise timing of the deal, as details were being hammered out.
Barclays said on Friday it did not need to raise any fresh capital after Britain's financial regulator subjected it to a strict stress test and was satisfied its balance sheet could withstand more pain.
It said the offer to take the UK government asset insurance was not in the economic interests of its investors. Joining the scheme could have increased political interference, analysts said.
(Additional reporting by Simon Meads; Writing by Douwe Miedema; Editing by Erica Billingham and Simon Jessop)