By Mark Kleinman, City Editor
The investment fund headed by Jon Moulton, the City financier, is among a pack of bidders vying to win control of Kiddicare, one of the UK's biggest maternitywear retailers.
Sky News understands that Better Capital is one of the bidders through to the second round of an auction of the business, which is owned by the supermarket chain Wm Morrison.
The sale has attracted the interest of a number of so-called turnaround specialists, understood to include Hilco, the owner of HMV, R Capital and Endless, whose investments include Crown paints.
Amazon and Tesco are also said to have requested access to information about Kiddicare, although analysts have said that it is unlikely that either will make a formal offer.
Morrison's, which has been hit by a prolonged slump in trading, is expected to have to pay a multimillion dowry to the acquirer of Kiddicare.
In March, Morrison's said that Kiddicare was "a business whose performance has been disappointing and which is no longer strategic", adding that it had taken a £163m charge on the maternitywear specialist.
A sale could include all ten of the stores operating under the Kiddicare name, or could involve the closure of some of the sites prior to a deal being completed, insiders said.
Morrison's bought Kiddicare for £70m in 2011, arguing that the online business would aid its own transition to becoming a multi-channel retailer.
It then acquired ten failed former Best Buy electrical goods stores set up as part of a joint venture with Carphone Warehouse.
The supermarket chain received a £40m payment from Carphone because of the stores' onerous rent obligations, but the shops have struggled, while Morrisons' subsequent technology agreement with Ocado has rendered the use of Kiddicare's systems redundant.
The Kiddicare auction, which is being handled by Rothschild, the investment bank, comes weeks after Dalton Philips, Morrison's chief executive, waived his annual bonus for last year following the announcement of a £176m loss.
The company also warned that profits in 2014 would be about half the level they reached in 2012.
Last week, it said that trading had deteriorated further, although it is fighting back against fierce competition from the likes of Aldi and Lidl with a price-cutting campaign across 1200 products.
In addition to its slump into the red, Morrison's has recently been forced to deal with the theft of personal data from 100,000 of its employees.
A Morrisons spokesman declined to comment, while none of the turnaround funds could be reached for comment on Monday.
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