British retailer Tesco has kicked off a sale process for its South Korean unit, whose market value is estimated at around $5 billion, according to industry sources on Friday.



The U.K. retail giant sent out a teaser letter to prospective buyers on Thursday and hired HSBC as the sale broker for Homeplus.



“With this pace, Tesco may be able to begin the preliminary bid in July and wrap up the takeover deal in October,” an official at an investment bank said.



Tesco owns a 100 percent stake in Homeplus, South Korea’s second-largest supermarket chain, which runs more than 140 stores as well as franchise and convenience stores in the country.



Industry watchers see global buyout firms Carlyle Group, KKR & Co. and CVC Partners and Korea’s National Agricultural Cooperative Federation, or NongHyup, as potential bidders for the business.



There seems to be a low possibility that Korean retail players will participate in the bid due to the hefty price tag and regulations on monopoly. The operation of the country’s No. 1 supermarket chain E-Mart and No. 3 Lotte Mart would be restricted by government regulations if they took over Homeplus.



The sale of the South Korean business comes after Tesco reported the biggest ever loss in British retail history in April and its credit rating was cut to junk status by Moody’s and S&P earlier this year.



Tesco entered the Korean market in 1999 in a joint venture with Samsung. Homeplus has grown to become its largest business outside the U.K.



By Park Han-na (hnpark@heraldcorp.com)