KKR and Carlyle, the US private equity firms, have been invited to bid for the Asian business, which trades as Homeplus, while London-based CVC Capital Partners has also been asked to bid.
The decision to sell the South Korean stores comes as the retail giant’s chief executive Dave Lewis looks to streamline the business, to concentrate on its core UK shops and raise cash.
After two decades of uninterrupted growth, Tesco has been struggling after it became distracted by overseas expansion and failed to spot the threat of discounters like Aldi and Lidl.
The retailer is now looking to slash capital spending, as well as fund a vicious supermarket price war and put more people on the shop floor.
Hong Kong-based Affinity Equity Partners and Asia-focused MBK Partners were also invited to bid, and Hyundai Department Store, which is separate from the car maker, said today that it was considering bidding.
Tesco, advised by HSBC, has asked for indicative bids later this month.
If the sale is achieved it would be Asia’s biggest private equity deal and the region’s second biggest consumer deal ever. Sovereign wealth funds could be involved in the financing of it, given the size of the sale.
Homeplus is Tesco’s largest business outside Britain, with more than 400 stores, 500 franchise stores and over six million customers a week.
But the business has been under some pressure, with falling like-for-like sales for the last two years.
Tesco is also selling its £1 billion Dunnhumby data business, and has already sold its Blinkbox digital entertainment service and Tesco Broadband to TalkTalk for an undisclosed sum.