After languishing four months on the auction block, mutual fund company Van Kampen American Capital is preparing to go public.

The company, which manages $40 billion in mutual funds, was expected to file plans late Wednesday with the Securities and Exchange Commission to issue $250 million of stock, well-placed sources said.

The move is seen as an attempt by its majority owner, the New York buyout firm of Clayton Dubilier & Rice, to spur suitors to close a deal. Both Van Kampen and Clayton declined to comment.

"An IPO puts pressure on the buyer to step up and complete their negotiations before Van Kampen American Capital goes public," said A. Michael Lipper, president of Lipper Analytical Services, Summit, N.J.

This year, Clayton hired Goldman, Sachs & Co. and Merrill Lynch & Co. to help it sell Van Kampen, which is based in Oakbrook Terrace, Ill. The company quickly attracted many potential buyers, including First Union Corp., NationsBank Corp., and Royal Bank of Canada.

With sales of mutual funds soaring, companies that manage these portfolios have been attracting intense interest from buyers and investors. But in a sign that the market may be softening, Van Kampen's $1 billion price tag has proven too high for most of its suitors.

Investment bankers said Wednesday that only three companies remain seriously interested in Van Kampen. They include Morgan Stanley & Co. and the McGraw-Hill Cos. The third could not be learned, but Sun America Corp. and Zurich Insurance Group, which recently acquired Kemper Corp., have also looked at Van Kampen.

Investment bankers say it is doubtful that the company's planned IPO will help seal a deal. Unlike some of its larger competitors, Van Kampen, which is best known for fixed-income funds, has grown slowly due to the prolonged bull market for stocks in recent years.

Van Kampen's stock funds have turned in a mediocre performance, according to Mr. Lipper.

"Their alternatives are getting very limited at this point," one investment banker said. "This thing is a dead horse."

Indeed, the same qualities that are stalling Van Kampen's sale are likely to keep investors away from its offering, even as the IPO market continues to boom. "I'm not sure this has the characteristics of a successful IPO," said one investment banker.

But one of Van Kampen's bankers, Milton Berlinski of Goldman Sachs, denied that the company's fixed-income focus was slowing a sale. "If we don't find the right strategic partner to grow the business further, it makes sense to access the public markets," he said.

Potential buyers now have between one and two months to step up to the plate, investment bankers said. That's generally how long it takes for a company to get regulatory approval and market a public offering.

Clayton paid $360 million for 76% of Van Kampen in 1992. Two years later, Van Kampen acquired American Capital, a Houston-based stock fund company. That deal put $500 million in debt on Van Kampen's books, a factor that could be hindering buyer interest.

Observers said Morgan Stanley is perhaps the most likely buyer, because it is looking to make a big splash in the retail market. The investment banking firm currently manages $8 billion in fund assets, mostly for wealthy individuals and institutional investors.

"They don't have any retail distribution; therefore, a group like Van Kampen American, on paper, looks like it would be attractive," said Mr. Lipper.

He added that Van Kampen could help Morgan make a big push in the 401(k) market, as its funds have good long-term track records.

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