HANOI/SINGAPORE -- China's CDH Investments is in advanced talks to buy a minority stake in Bach Hoa Xanh (BHX) from Vietnam retailer Mobile World in a deal that could value the grocery chain at up to $1.7 billion, two sources with direct knowledge said.

CDH, one of China's biggest alternative investment firms and also a former Mobile World investor, has emerged as the frontrunner to buy a stake of up to 10 percent after outbidding rivals, the sources said.

"CDH is looking to buy between five percent to 10 percent  stake," one of the sources said, adding that deliberations were ongoing and there was no certainty that a deal will be sealed.

The second source said a deal "could be struck as early as next month if negotiations were successful".

Both sources declined to be named as the matter was private.

CDH and Mobile World, Vietnam's biggest retail group by market value, declined to comment when contacted by Reuters.

A deal by Beijing-based CDH would underscore global investors' interest in Vietnam's fast-growing business sectors including consumer, despite the country's property sector woes triggered by a crackdown on corruption.

BHX's parent company, Mobile World, first announced its plan of a minority stake sale in the grocer in 2022 but then put it on hold due to unfavorable market conditions.

The sale process was restarted last year and had attracted interest from Singapore sovereign wealth fund GIC and companies from Thailand, Reuters reported at the time.

CDH, co-founded by Chairman Wu Shangzhi in 2002 as one of China's earliest private equity firms, is best known for its dealmaking in traditional industries such as consumption and manufacturing in the early years.

It now has over $27 billion in assets under management and has been a major investor in the world's largest pork supplier, WH Group, and leading appliance maker, Midea Group, according to its website.

CDH had exited its Mobile World investment nearly 10 years ago to capitalise on its gains, one of the sources said.

BHX, which was founded in 2015, was running more than 1,700 stores in Vietnam's southern and south-central provinces and was expected to be profitable from this year, its managing director told investors last year.