Goldman Sachs Group Inc and private equity firm Warburg Pincus LLC are among the investors nearing a deal to buy as much as a 20 percent stake in China Huarong Asset Management Ltd for about $2 billion, seeking a share in the profitable business of bad loan management in China.

Huarong Q1 profits up by 75%

Nonperforming loans may eclipse the level of 2008

Other investors preparing to buy into China's biggest manager of nonperforming loans include Malaysian state investor Khazanah Nasional Bhd, Citic Group, China International Capital Corp, Fosun Group Co and Cofco Corp, people familiar with the matter said.

Citigroup is the adviser for the deal, said the people, who declined to be identified as the matter remained confidential.

CICC, Citigroup, Fosun, Goldman Sachs and Warburg Pincus declined to comment.

The relevant officials at Huarong, Cofco, Citic and Khazanah did not immediately respond to calls and e-mails seeking comment.

State-owned bad debt managers such as Huarong are benefiting from a rise in NPLs in China as the economy slowed. The company had assets worth $65.7 billion under management at the end of 2013, and its net profit for last year jumped 44 percent to 10.1 billion yuan ($1.63 billion).

Huarong plans to sell the stake to strategic investors ahead of an eventual initial public offering, and the seven investors are likely to sign an agreement over the next month, the sources said.

China's biggest banks have said they want to manage their own NPLs, attracted by the profits of the bad debt managers.