Guardiola and City sports chief Txiki Begiristain have received glowing scouting reports on Marcos Llorente and are ready to move for the Spain U21 international this month.
Llorente spent last season on-loan at Alaves and is currently with Zinedine Zidane's senior squad. However, the Real coach has little room for the youngster and believes he should move away for a fresh loan this season.
City are set to offer a permanent alternative, with their Spanish scouts believing Llorente can eventually develop into a player to match Barcelona's Sergio Busquets and the retired Xabi Alonso, says Diario Gol.
A bid for Llorente is being readied by City - potentially for this week.