Reports are listing a San Francisco-based private equity firm as the leading candidate in the bidding war over ETF leader BGI.

That shouldn't come as a big surprise to those following the next evolution of a changing iShares brand.

In case you missed it, weekend stories in papers ranging from the Wall Street Journal to the Sunday Times reported that a list of finalists has emerged in the auction of Barclays Global Investors by its parent London bank. Insiders are indicating that Hellman & Friedman LLC could wind up as the leading candidate to assume control of BGI.

As pointed out in the WSJ, that's a private equity firm also based in San Francisco with a history of past relations with the asset manager. Other possibilities, according to the paper, are Bain Capital and other private equity rivals such as TPG and Apax Partners LLP.

Although we've heard some industry veterans arguing against such a scenario—that larger, more-diversified fund companies and brokerages are the more likely eventual winners—the push by private equity players actually makes a lot of sense.

First, the strength of the iShares brand among retail investors might provide a nice counterpoint for a private equity firm, which derives most of its investment flows from institutional investors. Private equity companies are also deeply familiar with the ETF market, as they've proven to be cutting edge participants in the ETF marketplace on the institutional side.

When you add in the fact that the core business of private equity is to capitalize on short-term market dislocations, you can see why a private equity bid for iShares would make sense. As IndexUniverse.com Editor Matt Hougan told Dow Jones Newswires recently, while iShares is a very attractive asset, most of the obvious bidders are tight on cash. A private equity firm could buy iShares today, run it for a few years and then unload it into an improved market.

Whatever happens, iShares is likely to change, shaking off some of the rust and moving into new ventures. In fact, IndexUniverse.com Publisher Jim Wiandt thinks its new owner is probably going to be someone who wants to take BGI's existing index-based ETF franchise and expand upon that framework.

In a MarketWatch column by Chuck Jaffe that showed up this weekend, Jim noted that "active is going to happen at iShares; it's a seed that has been planted."

In a recent conversation I had with Lee Kranefuss, the chief executive officer of BGI's iShares business hinted at the same. He explained that BGI was a leader in institutional management of enhanced indexing and other related quantitative strategies that were more active in nature, and that BGI has been studying how a more active sort of ETF could leverage the work done within other parts of the company.

Whether that initiative would be scuttled or delayed by a sale remains to be seen. But recent reports indicate that BGI may want to maintain up to 20% of iShares in any sale.  You can bet that any buyer is probably interested in what BGI is doing in the active space.

And just when you thought you'd seen about all there was to see in the ever-changing world of ETFs ...