Permira, the British buyout fund, is vying for control of the Italian fashion house behind Valentino and Hugo Boss amid mounting private equity interest in the sector.

It is fighting rival private equity groups, including Carlyle Group, for control of Valentino Fashion Group, which also houses the Missoni and Marlboro Classics labels. A successful campaign could mark the biggest private equity deal in the European luxury goods sector.

The buyout funds are understood to be in separate talks with the controlling Marzotto family and the management of Valentino over taking a substantial stake in the group, just two years after it was listed on the Milan Stock Exchange.

Shares in Valentino, whose core label is as famed for its sweeping evening gowns as its celebrity clientele, such as Kate Winslett and Anne Hathaway, remained suspended yesterday, pending an announcement from the company. The bourse halted trading on Monday after the fashion house revealed that its key shareholders had been approached by buyout funds.

Although the private equity firms have yet to table a formal offer, a bid is expected to come in “at more than” €34 a share, valuing Valentino at about €2.6 billion (£1.7 billion).

As well as talking to the Marzotto family, which controls 50 per cent of Valentino through various holding companies, the firms are talking to Canovo, the investment vehicle of Antonio Favrin, the chairman, which holds a near20 per cent stake.

The talks mark a change of heart for the Marzottos, who had maintained that they would never part with one of the world’s most famous fashion labels. Stefano Marzotto, the textiles baron who bought Valentino with his brothers in 2002 for €240 million, said that the family would decide on a sale once they have received a concrete offer.

The family followed up the acquisition of Valentino by clinching a 50.9 per cent stake in Hugo Boss, the German label, and spun off the labels in 2005 as part of the newly created Valentino Fashion Group. It is thought that a successful deal could trigger a full-scale bid for Hugo Boss.

The sale of a stake marks an escalation in takeover activity in the sector, which traditionally is made up of small, family owned brands that lack the clout to compete with industry titans, such as LVMH.

Jimmy Choo and Bally, of Switzerland, are among the names to have been snapped up by private equity firms, while Prada sold Jil Sander to the private equity firm Change Capital Partners last year.

Valentino Garavani founded the eponymous label in 1959 in Rome. He built up the company over the next four decades, attracting a celebrity clientele including Jacqueline Kennedy, who wore a white Valentino creation at her wedding to Aristotle Onassis.

In 1998, the designer sold the company to HdP, a conglomerate controlled in part by the late Gianni Agnelli, the former head of Fiat, who later sold the label to Marzotto Apparel.

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