The fund management group founded by Martin Gilbert, the City veteran, is in talks to absorb parts of the firm jointly founded by Sir Jacob Rees-Mogg, the former cabinet minister.

Sky News has learnt that London-listed AssetCo is one of a number of suitors circling Somerset Capital management, which announced last week that it would wind itself down following the loss of St James’s Place, its largest client.

City sources said on Monday that AssetCo, which has a market capitalisation of just £69m, was likely to be interested in taking on two of Somerset’s fund managers rather than acquiring a wider chunk of the business.

Mr Gilbert, the former Aberdeen Asset Management chief, has sought to bulk up AssetCo through acquisitions, but has seen its performance falter.

Its shares have slumped by a third over the last year.

Sir Jacob has had no day-to-day involvement in Somerset since 2010, when he became an MP, although he did retain an economic interest in the partnership.

Lord Johnson, the investment minister, ran Somerset as chief executive until he was ennobled by Liz Truss during her brief premiership last year.

The identities of other parties interested in taking on Somerset’s funds were unclear on Monday.

Somerset is now said to manage less than $1bn in assets, although it declined to comment either on that figure or its talks with AssetCo and other suitors.

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Oliver Crawley, a partner at Somerset, said last week: “The current teams have delivered strong performance for their investors and continue to do so.

“We hope a transition can be secured which we believe will give the funds a bright future.”

A spokesman for AssetCo also declined to comment.

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