Sky News has learnt that the private equity backers of Forest Holidays have hired investment bankers to explore a sale that could value it at more than £250m.

Forest Holidays, which trades from 12 locations including a site in Sherwood Forest and another at Beddgelert in Snowdonia, is controlled by Phoenix Equity Partners.

A minority stake is owned by LDC, another private equity firm, while the Forestry Commission, a non-ministerial government department, also holds a chunk of the shares.

An auction of the business, which is unlikely to get under way for some months, will come amid a frenzy of corporate activity in the UK holiday sector, fuelled by a surge in domestic demand during the pandemic.

Park Holidays recently changed hands in a £950m deal after being sold to Sun Communities of the US.

The UK's largest operator, Parkdean Resorts, is expected to trade in the coming months, while CVC Capital Partners acquired Away Resorts, another big player in the sector, last year.

Butlin's, one of the most famous names in the industry, is also up for sale, with Bourne Leisure, its parent company, due to kick off a process shortly.

The sale of Forest Holidays will be overseen by bankers at Harris Williams.

A spokesman for Phoenix declined to comment.