Govett's chairman, Arthur Tueger, admitted that a $20m lawsuit brought against his group by one of its own funds, the Govett American Endeavour Fund, had derailed the long-awaited merger. The acquisition by Commerzbank, the German bank, of the British fund management group Jupiter Tyndall last week for $270m had prompted a rethink, Mr Trueger said.
Govett has appointed Schroders and Bear Stearns to advise on the sale. Mr Trueger said Schroders had done the Jupiter deal and he wanted the same thing.
Now he was looking for a US, UK or Continental buyer with plenty of distribution capability to complement Govett's products, he said.
The businesses on the block are John Govett in London and Govett Asset Management Company (GAMCO) in San Francisco. Together they have $5.1bn in funds under management, similar to Jupiter's $6.2bn.
Jupiter's strength was in pension funds, while John Govett's is in investment trusts, Mr Trueger said. Any buyer would get access to John Govett's City presence and GAMCO's US institutional client base, he added.
"We've already been approached by one party, and will be talking to others. I hope to have a deal by next month, and to close it this half," the chairman said.
The law suit by Jersey-based American Endeavour fund will be dealt with by the holding company, and the businesses for sale will be unaffected, he said. The law suit had driven Govett's share price down from around 360p to 260p.
"The litigation is not a positive experience. They sued us and we sued them," he said. Govett's countersuit is for $100m. The case could drag on for up to 18 months, one source said.
Nigel O'Sullivan, a partner with the institutional investment adviser Bacon & Woodrow, said that Govett's retail funds were strong but its institutional business had suffered badly in recent years.