Billabong has agreed to open its books to private equity firm TPG Capital, but said it does not believe the AU$694m bid reflects the "fundamental value" of the Australian surfwear brand.

TPG has submitted a $1.45 a share offer for Billabong, much less than the $3.30 per share offer it put forward earlier this year.

Billabong said TPG will be able to conduct non-exclusive due diligence in the hope that it will improve its "understanding and valuation of Billabong".

"The board of Billabong does not believe that the proposal reflects the fundamental value of Billabong in the context of a change of control transaction," a statement said.

It added that Billabong will seek to ensure that the medium to long-term prospects of the company and "its unique brands are reflected in the value realised by Billabong's shareholders".

Billabong said the due diligence process will take several weeks.

The surfwear brand is set to announce its full-year results on 27 August, with recently appointed CEO Launa Inman to unveil a three-year transformation strategy for the brand.

Goldman Sachs is acting as financial adviser and Allens is acting as legal adviser to Billabong.