Party City Holdings Inc is preparing for a potential initial public offering (IPO) in the first half of 2014, according to sources familiar with the matter in an exclusive report by Reuters.

Party City is the biggest party goods seller in the US. The firm was acquired more than a year ago by Thomas H. Lee Partners LP for USD2.69 billion. Party City's products include party supplies, costumes, and decorations. These products are being sold under its namesake brand and Halloween City, Party Packagers, and Factory Card & Party Outlet names, the report said.

Thomas H. Lee is presently working with banks including Morgan Stanley and Goldman Sachs Group Inc on the potential IPO. The unnamed sources also said that the firm had not yet finalized the full syndicate of underwriters, said the report.

Thomas H. Lee put in a USD584 million equity investments in Party City. According to credit rating research notes, the firm has so far regained approximately 40% of the investment through dividend recapitalizations, Reuters reported.