A string of private equity investors are expected to bid for Italian fashion firm Roberto Cavalli when the company announces a formal plan to sell a big stake to private investors or through an initial public offering, IPO bankers have told just-style.

Earlier this month, owner Roberto Cavalli confirmed he would sell a large stake in the firm for no less than EUR1.4bn (US$2.19bn) to finance international expansion on the back of booming global demand for luxury goods.

The company has hired investment bank Merrill Lynch to sell the assets but it remains unclear whether the company will invite private equity companies to bid or opt for a stock market flotation instead.

"The company is still deciding but there will be more news in coming weeks," said a banker familiar with the situation.

Cavalli would not return phone calls.

Private equity houses Permira, Cinven, Carlyle and Blackstone are said to be interested in Cavalli, which recently launched a fashion collection for Swedish retail giant H&M and posted revenues of EUR238m last year.

Other high-couture rival Valentino sold a 60% stake to Permira last year. Cavalli's rumoured sale plans come as other rivals Prada and Salvatore Ferragamo are eyeing IPOs this summer.

However, continual turbulence in the financial markets could motivate Cavalli to scrape the stock offering and sell to a buy-out bidder, the banker said.

By Ivan Castano Freeman.