Fondo Strategico Italiano (FSI) has emerged as frontrunner to buy a minority stake in family-owned Versace estimated to be worth as much as EUR850 million. FSI is Italy's state-run private equity fund.

According to a report by the Financial Times, FSI has emerged as a good fit for the Versace family after securing the backing of a Qatar joint venture. FSI struck a deal with Qatar last year to invest up to EUR2 billion in Italian fashion, food, furniture and tourism.

The Versace family sought a partner that can support its international expansion and an option to list on the Milan stock exchange in three years, sources told Financial Times. 

The report said that the Italian fashion company is looking to sell less than a third of its shares.

Versace president and co-chief executive officer Santo Versace owns a 30% stake in the company. Vice president and chief designer Donatella Versace holds a 20% stake. Meanwhile, Ms. Versace's daughter Allegra Versace is currently the largest shareholder with 50%, Financial Times reported.