A lead bidder for New Star Asset Management, the embattled fund management group whose banks agreed to a debt-for-equity swap last month, could be announced as soon as tomorrow, according to people close to the situation.

It is understood that the number of potential buyers for the business, which its lending banks are keen to offload as soon as possible, have been whittled down from nine to about five.

Having looked more closely at the company, some firms have dropped out of the line-up of would-be acquirers for the former stock market darling.

The group has confirmed that it has received expressions of interest from several putative bidders in a first round.

Schroders is understood to have submitted an indicative cash offer for the asset manager. Other bidders include Henderson, Gartmore and Neptune Investment Management.

Aberdeen is thought to have made a share offer for the group. All offers are conditional on a capital restructuring agreement with its lenders.

The banks, advised by UBS, are expected to make up their minds about the offers in the week ahead.

New Star’s banks – HBOS, Lloyds TSB, HSBC, Royal Bank of Scotland and National Australia Bank – have been soliciting offers for the group after they agreed last month to write down £260m of debt, converting £240m of it into £94m of preference shares and a 75 per cent stake in the group.

Initially the banks set a price of about £115m for the group, the value of New Star’s cash and the preference shares. But, following sustained market weakness, there are doubts they will achieve their target. Meanwhile, the group has agreed to pay key fund managers a bonus of three months’ salary if they stay to March, in the hope that this will help stem further outflows from funds.

The group, which was founded in 2000 by John Duffield, has been overwhelmed by falling markets, outflows from its funds and its high debt levels.

Assets under management, which were more than £20bn six months ago, have fallen to about £11.5bn this month.

A circular on proposals to delist the group’s shares and turn it into a private company is due out over the next couple of days.

New Star Asset Management shares last traded at 3.89p, giving it a stock market valuation of just £10.45m.