JC Flowers is considering an offer for Friends Provident, believed to be around £4bn.
It has built up a 2.7 per cent stake in Friends and says it would approach the board with a view to making an offer thought to value the company at 175p per share.
It is thought the private equity firm is waiting for the outcome of Friends’ strategic review, due to be published on January 31, before making a formal offer.
The life office announced the strategic review of its business following its failed bid for Resolution last November, which led to the departure of chief executive Philip Moore.
Moore has still not been replaced although it is believed that Friends has unsuccessfully approached Standard Life UK financial services chief executive Trevor Matthews to fill the role.
Informed Choice joint managing director Martin Bamford says: “I think that a private equity firm buying Friends is more favourable when compared with the alternative of another life office buying it. It should mean there is not that period of chaos when two life offices try to merge their systems and hopefully its customer service will not deteriorate.”