Three private equity fund groups made final-round offers to buy a controlling stake in Tesco’s Korean unit Homeplus valued at about 7 trillion won ($5.86 billion), according to sources on Monday.

A consortium formed by U.S. private equity firm KKR and Asia-based Affinity Equity Partners submitted its final bid for the country’s second-largest supermarket chain to HSBC, which is advising Tesco on the sale.

Korean private equity firm MBK Partners, which failed to link up with Goldman Sachs’ private equity arm for the deal, bid for the mega deal with equity funding from Korea’s state-run National Pension Service.

Another shortlisted private equity firm, Carlyle Group, also joined the bidding, inviting Singapore’s sovereign wealth fund GIC as a co-investor for the deal.

According to sources at investment banks, the potential suitors offered over 7 trillion won, which would make the sale Korea’s biggest-ever M&A deal.

U.K. retail giant Tesco which owns a 100 percent stake in Homeplus, drew up a shortlist of buyout firms that offered more than 6.7 trillion won for the takeover.

The sale of the Korean business is a crucial step in Tesco’s turnaround plan to recover from an accounting scandal at home. The supermarket group reported the biggest annual loss in its 96-year history in April, hit by a $10.7 billion write-down. Its credit rating was cut to “junk” status by Moody’s and S&P in January.

Korean confectionery company Orion and local retail giant Hyundai Department store did not participate in the bid, but they are expected to join the merger deal as strategic investors once Tesco singles out a preferred bidder in September.

“We are closely watching the Homeplus takeover deal while leaving the door open,” an Orion official said.

Homeplus generates annual revenue of around 7.1 trillion won, and with more than 400 stores, it is Tesco’s largest business outside of the U.K.

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