A retail investor backed by the private equity giant Apollo Global Management is in talks to buy a big stake in Missguided as the online fashion retailer scrambles to shore up its balance sheet.

Sky News has learnt that Alteri Investors, which has backed retailers across Europe such as Bensons for Beds, is plotting the acquisition of a large minority shareholding in Missguided in return for an investment running to tens of millions of pounds.

Discussions between Alteri and Missguided’s founder, Nitin Passi, are ongoing, and could still fall apart, sources said on Tuesday.

Mr Passi’s hunt for external investment has become increasingly urgent in recent weeks amid growing financial strain on the business.

One insider said that Missguided’s existing shareholders were also expected to invest at least £10m as part of the recapitalisation of the company.

In September, Sky News revealed that JD Sports Fashion was in talks with Mr Passi that could have led to an outright takeover of the business, although those negotiations faltered several weeks ago.

Missguided, which is being advised by bankers at Rothschild on the talks, was founded by Mr Passi in 2009 when he was just 26.

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It has grown into one of Britain’s biggest online-led fashion retailers, competing with the likes of ASOS and Boohoo.

Its journey has not been without serious difficulties, including in 2017 when one of its Leicester-based suppliers was accused after an undercover investigation of paying workers less than the minimum wage.

In 2019, it faced scrutiny over the sale of a £1 bikini, but responded by saying that the clothing item had “cost us more to produce than £1 and we’re absorbing the costs so we can offer it at an incredible price as a gift to our customers”.

Missguided did open a handful of physical stores, including one at London’s Westfield shopping centre, but decided to close them after deciding that their operating losses were too large to justify.

In April, Mr Passi told The Mail On Sunday newspaper: “We can still grow this business as we are but we want to grow the business more aggressively.

“This is not for me to take money off the table, we want to put money into the business.”

Mr Passi’s fortune was estimated at £250m in the 2018 edition of The Sunday Times Rich List, although he did not feature in the most recent list.

Alteri declined to comment, while Missguided could not be reached for comment.

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