According to sources familiar with the matter, Barclays Private Equity (PE) is to be spun off by October while BarCap is to raise Â£1.8 billion from a completely new fund.
BarCap may no longer invest in the PE fund while the investment vehicle may also receive a new name.
The decision to âspin offâ is thought to have been made during a meeting of shareholders from Barclays PE.
Final details of the new arrangement are yet to be decided although it is expected that BarCap will retain management of any investment portfolios within the fund which it founded.
The private equity division was established by BarCap 25 years ago and has subsequently invested in more than 350 businesses.
Negotiations over the future of the business between BarCap, representatives from the PE unit and investors are thought to have been ongoing for the past 12 months.
Earlier in the year BarCap reported a 29 per cent increase in profits during the first quarter of 2010 when compared with statistics from the same period last year.
By Jim Ottewill