The Financial Times reports that Bain Capital’s Special Situations unit is among the groups to have submitted a first round bid for the UK’s largest coffee chain.
Initial bids were due in late September.
Costa Coffee has also attracted interest from the private equity owner of Asda, TDR Capital.
Apollo, another prospective suitor for Costa, declined to submit a bid, according to people familiar with the matter.
Costa, which was started in London more than 50 years ago, is the world’s second largest coffee chain after Starbucks, with more than 2,700 branches in the UK and Ireland.
Coca-Cola is working with investment bankers at Lazard on a potential sale of Costa after buying the business for £3.9bn in 2018.
The acquisition, made as part of an effort to diversify beyond fizzy drinks, has failed to deliver with Costa struggling to deal with rising costs and subdued consumer spending since the Covid-19 pandemic.
Coca-Cola chief executive James Quincey acknowledged to analysts in July that Costa had “not quite delivered” and was “not where we wanted it to be from an investment hypothesis point of view”.
In 2023, Costa reported an annual loss of £13.8m on revenues of £1.2bn, according to the most recently available set of accounts at UK Companies House.
Coca-Cola took a dividend of £85m.
Cafés and restaurants have struggled in recent years with rising labour costs and persistent inflation in the price of ingredients such as coffee beans.
Bain’s Special Situations was set up in 2018 by the US private capital group to provide “liquidity for complex assets”, according to its website. It now manages $21.6bn of assets.
The unit became the controlling shareholder in Bread Holdings, the parent company of upmarket UK bakery and café chain Gail’s, in 2021.
It was also part of a group of investors that took control of Pizza Express during the pandemic and pumped an additional £20m of equity into the restaurant chain this year.
Bain has about $185bn of assets under management in total, and in the UK owns businesses through its private equity arm, including the marketing data and analytics group Kantar.
Bain declined to comment. Coca-Cola did not immediately respond to a request for comment.