MILAN (REUTERS) - Italy's Versace is expected to choose between three potential partners vying for a minority stake in the fashion house around the end of February, three sources familiar with the matter said.

Versace is selling a 20 per cent stake to an outside investor to fund growth.

"A deal isn't expected to close before the end of February, or maybe early March," one of the sources said.

Versace declined to comment on the progress of the talks.

United States (US) private equity funds Blackstone and CCMP, and Bahrain's Investcorp are the final candidates in a list of bidders which had included private equity firms Permira, Clessidra and Ardian as well as the Italian government's strategic fund, people familiar with the matter have said.

CCMP and Investcorp declined to comment. Blackstone could not be immediately reached for comment.

The company, which has been wholly owned by the family of founder Gianni Versace since his murder in 1997, plans to list publicly in 3-5 years, and is looking for a partner that will not interfere in day-to-day management.

Appetite for Italian luxury listings has been strong in recent years. Most recently, ski wear maker Moncler's shareholders raised around 784 million euros (S$1.3 billion) from a share sale in December.

Versace will issue fresh shares as part of the stake sale, through which it aims to raise funds to open new shops and expand its product offering, especially its high-end "first line" clothing.