Icelandic investor Baugur has run its ruler over Alexon's young fashion chain Envy, after it received a prospectus on the business earlier this month.
Baugur joins entrepreneur John Kinnaird, who bought footwear multiple Dolcis from Alexon in December for £3 million, as a potential buyer.
One retailer said Baugur was likely to be the favourite. "It fits with Baugur's plan to create a menswear arm," he said. "But it also makes sense for Kinnaird as he bought Dolcis from Alexon."
A City source told Drapers that Alexon had valued Envy at £4m, lower than the rumoured £15m to £20m asking price and below the £30m that Alexon paid Style Holdings for it in 1999.
Baugur kicked off its menswear by acquiring All Saints in December.
A spokesman for Baugur confirmed it had received the prospectus, but denied it was buying Envy. Buyers had until Wednesday night to bid for the 56-store chain.