Investment vehicle American International Group's equity division, Capvest Equity Partners, is reportedly in talks with Blackstone about launching a GBP1bn joint bid for Unilever's up-for-sale European Frozen Foods business, reported the Daily Telegraph.

The paper said that Capvest has hired Merrill Lynch and Deutsche Bank to broker the deal, but has not come to any final agreement with finance rival Blackstone as yet.

Capvest already owns UK-based fish supplier Young's Bluecrest Seafood, and Scandinavian frozen foods company Findus.

According to reports, Lion Capital, PAI, Candover, Permira and Apax, Oaktree Capital Management, and Lehman Brothers merchant banking may also be interested in the division, which includes Captain Birds Eye and Iglo.