Private equity firms HgCapital, Isis Equity Partners and Change Capital are understood to be the frontrunners to buy stationery retailer Paperchase.

Retailers WHSmith and HMV were understood to have looked at the Paperchase business, but it is likely to be sold to a private equity firm. Paperchase has a price tag of up to£80 million.

Paperchase owner Borders appointed JP Morgan and Merrill Lynch in March to review its assets, which include Paperchase.

Last year, Borders sold a majority stake in its UK and Irish book stores to Risk Capital, the private equity group controlled by entrepreneur Luke Johnson, for£10 million.

In the year to February 2007, Paperchase made a pre-tax profit of£6.2 million on turnover of£47.1 million.

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