However, Liontrust added that, “there can be no certainty that this will lead to a formal offer.”

GAM has confirmed it is in discussions with Liontrust Asset Management “among others.”

It added: “The board is working tirelessly on options to ensure that the firm is strategically positioned in the best interests of all stakeholders.

“A further announcement will be made should any of these options reach a successful conclusion.”

GAM has its headquarters in Zurich and has around £67bn in AUM, according to its website. It employs 594 people in 14 countries and has UK investment centres in London and Cambridge.

Shares in GAM climbed around 30% on Tuesday when the news broke and both sides confirmed the talks. Meanwhile Liontrust shares have fallen around 10% on the news.

Liontrust has today published a trading update and said pre-tax profit for the last 12 months, “will be not less than £86m.”

It said AUM at 31 March was £31.4bn, a fall of 3.6% over the last three months.

John Ions, chief executive, said: "It has been a challenging year for Liontrust in terms of net outflows and mixed performance for our funds but this has to be set against a backdrop of the industry in aggregate suffering UK retail net outflows in 10 out of the 12 months last year.”

It bought Majedie Asset Management for £41m a year ago and said the investment team who joined from Majedie generated performance fees of £12m, out of a total of at least £17m for Liontrust as a whole. The acquisition included taking on the management of the £1.1bn Edinburgh Investment Trust.

Mr Ions said: “The acquisition of Majedie has broadened our investment capability, including in alternative investments and global equity funds.”