L'Oreal, which bought the company in 2006, sent out information packages earlier this month to a large number of bidders, hoping for a valuation of close to 1 billion euros (877 million pounds). Yet most investors have valued The Body Shop at less than 700 million euros, two of the sources said.

Bain Capital, BC Partners, CVC and Advent are among those planning to make an offer for the business which prides itself on offering "naturally-inspired products," the sources said.

The Body Shop pioneered the ethical beauty products industry four decades ago, but has recently been challenged by weakening sales and profits, making it tricky for large buyout funds to match L'Oreal's price expectations, sources said.

Spokesmen for L'Oreal, Bain Capital, BC Partners, Advent and CVC declined to comment.

Other heavyweight buyout funds including KKR, CD&R and PAI Partners are also currently exploring a possible bid for the maker of beauty products such as Body Butter and white musk perfumes.

Last year The Body Shop, which has more than 3,000 stores across the world, saw its operating profit fall to 33.8 million euros from 54.8 million euros in 2015 while its revenues dropped to 920.8 million euros in 2016 from 967.2 million in 2015.

CD&R and PAI declined to comment while KKR was not immediately available.

Most industry players have snubbed the auction, led by investment bank Lazard, the sources said, while Chinese investors have signalled interest in making an offer for the business which has yet to crack the Chinese market.
One source said the Chinese practice of animal testing would clash with the company's position.

When Dame Anita Roddick launched The Body Shop in 1976, a stance against animal testing, and strong support of environmental and animal protection were unusual.

But several decades later, that unique positioning has become commonplace with a raft of competitors including Lush and Origins. The Body Shop, which employs more than 22,000 people in over 60 countries, has struggled to grow, prompting L'Oreal's decision to sell it.

Private equity funds are best placed to revamp its brand and boost global growth, but they are wary about how much to pay, saying turnaround work is required, the sources said.

Companies such as CVC and Advent have all recently invested in large European retailers. In 2015 CVC bought a majority stake in German beauty retailer Douglas from Advent in a deal worth almost 3 billion euros.