Sky News has learnt that Livingbridge, the private equity firm which has owned a big stake in Loveholidays since 2018, is preparing to kick off a formal auction of the company.

City sources said that plans for a refinancing were now evolving into a sale, with one insider saying it was likely as soon as the second quarter of the year.

Evercore, the investment bank, is working with Livingbridge.

One insider said that based on earnings before interest, tax, depreciation and amortisation of approximately £65m, Loveholidays would be expected to command a price tag of about £900m.

Such an outcome would represent a remarkable turnaround for the business, which was supported by a substantial funding injection from Livingbridge during the COVID-19 pandemic.

Loveholidays was founded in 2012 by Alex Francis and Jonny Marsh, and now employs in the region of 250 people.

Competing with the likes of On The Bech, its listed rival, it has doubled profitability since the period immediately before the pandemic.

It specialises in trips to the Mediterranean and Canary Islands, and boasts that its inventory of 35,000 hotels and 99% of all flights result in 500bn possible holiday packages.

Livingbridge declined to comment on Wednesday on a potential sale of Loveholidays.