According to sources close to the deal, the new investors aiming to take a stake in the company include a number of regional investment funds and banks.

An investment vehicle managed by Bahrain alternative investment company Investcorp and the UAE-based jewellery company Damas, are among those looking to take part in the transaction to buy a stake in Al-Fardan Jewellery.

Investcorp is planning to make the investment in Al-Fardan through its Gulf Opportunity Fund. About six regional banks have also been approached about supplying further finance to the deal.

Al-Fardan has a network of stores covering Saudi Arabia and Qatar, and the proceeds from the deal would be used to fund further expansion. Credit Suisse is understood to be acting as financial adviser to the Al-Fardan Group.

A source close to the deal says he does not expect the acquisition to be completed for some time because of the impending slowdown in activity over summer and the number of parties involved in the negotiations.

Al-Fardan, which also operates businesses in the car, real estate and marine services sectors, did not respond to requests to comment on the acquisition.