The owner of Liberty department store, private equity firm BlueGem, is in talks to rescue Mamas & Papas.
BlueGem is understood to be close to a deal that would inject £20m into the retailer, The Sunday Telegraph reported.
Around £12m will be invested into the Mamas & Papas business, which is being advised by KPMG on the deal, with the remainder expected to be used to pay off a shareholder loan to David Scacchetti, who founded the mother and baby products retailer with his wife Luisa over 30 years ago.
BlueGem has been given a period of exclusivity to hammer out an agreement for the stake sale.
Mamas & Papas, which has around 70 UK stores and trades in 59 overseas markets, reported sales of £108m against profits of £5m last year. However, it is believed it has recently suffered a decline in trading.
The Telegraph reported that BlueGem may struggle to win the support of Mamas & Papas main lender HSBC, which is seeking partial repayment of its loans. The private equity firm has asked HSBC to roll over its debt to give Mamas & Papas some breathing room.