IGNIS Asset Management's Glasgow office is likely to come under threat, industry sources have warned, after Standard Life made a second attempt to buy the business which is owned by Phoenix Group.
The two companies remain in "advanced talks", with a deal possible as early as tomorrow when Phoenix announces its annual results.
Ignis is valued by analysts at £370 million to £430m. Its sale is seen in the City as a way for Phoenix to focus on its closed life business and paying down its £2 billion of debt while Standard Life Investments would boost its £184.1bn of assets under management by more than a third in a single step.
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Edinburgh-based Standard Life is expected to shut Ignis's operations in Glasgow and London to cut costs, although it could hold on to its well-regarded fixed income and property fund management teams.
Some analysts believe that a deal could be funded from Standard Life's existing cash holdings and would immediately boost its profits. But asset management industry sources warned that it could constrain capacity at Standard Life Investments and embroil the company in technology issues.
A senior source in the Scottish investment industry said: "The view is that Ignis has been a badly managed business with offices in both London and Glasgow and there are a lot of costs to take out.
"The only areas of any interest (to SLI) are bonds and property."
The source said it would "sadly" mean the end for Ignis's Glasgow headquarters. It employs around 245 people there, with around 140 people in London although senior staff based in Scotland have been expected to spend part of their time in London. Its fixed income operation moved from Glasgow to London several years ago.
Ignis is the last of Glasgow's notable fund managers.
Since the mid-1990s, the Scottish Amicable Investment Managers and Abbey National asset management operations in Glasgow have been closed.
Aberdeen Asset Management swallowed up Murray Johnstone in 2000, then Glasgow Investment Managers in 2007.
In 2010 Saracen Fund Managers moved to Edinburgh to have greater access to companies.
Ignis had £67.6bn in assets under management at the end of September, of which £51.4bn was in fixed income. In 2012 it abandoned an attempt to expand in the retail market by opening joint venture fund boutiques.
The bulk of its assets are in Phoenix's closed funds, including Scottish Provident, Scottish Mutual and Alba Life.
Jason Hollands, managing director at broker Bestinvest, described it as a "plug-in-and-play" deal for Standard Life.
"These mandates may be big and boring and have lower headline fees than retail. But they could be profitable because it is scale stuff.
"Running billions of pounds of government bonds, you would not necessarily need a bigger team."
This is the second time Standard Life has cast its eye over the business. In 2007, it approached the company, then called Resolution, with a £4.7bn offer for the whole group. But it was trumped by Pearl's £4.9bn bid.
Analysts at JP Morgan said the deal would boost Standard Life's earnings with the potential for "cost synergies".
But Marcus Barnard, analyst at Oriel Securities, said: "Standard Life shareholders may question why the £400m or so is being used for acquisitions."
Eamonn Flanagan at Shore Capital said: "Although we understand why Phoenix might be interested to take advantage of some heady valuations in the market currently for asset managers, we believe such a deal would be likened to 'selling the family silver'."
Ignis, Phoenix and Standard Life declined to comment.