US-based Hellman & Friedman is assembling a collection of private-equity groups that may bid for Barclays’ iShares unit in a transaction valued at as much as $5 billion, a person with knowledge of the situation said, according to Bloomberg.

Barclays, the

UK’s third-largest bank, has set a deadline for offers for the end of this week, said the person. The lender may finance as much as 80 per cent of the sale price of the iShares unit, the Wall Street Journal reported.

Barclays is exploring the sale of iShares, a unit of its fund management arm, as it tries to bolster capital without turning over a stake to the

UK government. The London-based company said earlier this month that it had begun talks with the Treasury about taking part in an insurance programme capping losses on toxic assets.

The UK bank has been keen to avoid receiving

UK taxpayers’ money as it will almost certainly come with associated restrictions on executive pay and potential constraints on corporate strategy.  

San Francisco-based Hellman & Friedman raised $8.4 billion for its latest fund, which closed in April 2007. The firm already owns

UK fund manager Gartmore Investment Management. With Bain Capital, H&F jointly bid for bankrupt Lehman Brothers’ asset-management unit, only to be topped in December by an offer from the unit’s executives.

iShares is the biggest manager of exchange traded funds. Barclays Global Investors had £1.04 trillion ($1.5 trillion) of funds under management at the end of 2008, including £226 billion at iShares.

ETFs, which are listed and traded like individual stocks, enable holders to get exposure to markets such as bonds, equities, commodities, infrastructure and other sectors without the holder having to own the underlying index components. They typically charge a fee that is far lower than for a conventional index-tracking mutual fund, and are widely used by wealth managers as building blocks of portfolios.