The Original Factory Shop owner Modella Capital is among a number of parties circling Poundland.
The private equity firm, which also owns WHSmith’s high street business, has made it through to the second stage in the auction of the discount chain, Sky News reported.
If successful, Poundland would be the fourth major retailer Modella has acquired in recent months.
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The firm launched company voluntary arrangements at Hobbycraft and The Original Factory Shop last month, which will see both retailers shut loss-making stores and slash rents.
New Lakeland owner Hilco Capital and turnaround investor Endless are thought to also be in the running to acquire Poundland.
The discount chain’s owner Pepco Group put its British business up for sale in March following weak sales and steep losses.
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