CHINA (From news reports) -- Singapore-based RGE Pte is considering an offer for Vinda International Holdings Ltd., people with knowledge of the matter said, potentially setting up a bidding war for the Hong Kong-listed tissue maker.

The pulp producer is working with advisers on a potential buyout offer for the Chinese firm, the people said. Deliberations are ongoing and RGE could still decide against a deal, said the people, who asked not to be identified as the information is private.

A move by RGE could add a new dimension to the bidding for Essity AB's 52% stake in Vinda, which has drawn bidders such as Suzano SA, the world's largest producer of hardwood pulp from Brazil. Buyout firms Bain Capital, CVC Capital Partners and DCP Capital also advanced in the process, it was reported in August.

Shares of Vinda jumped as much as 5.1% on Thursday after the report. The stock is still down about 13% this year, giving the firm a market value of about $3.1 billion. Essity's 52% stake is worth about $1.6 billion based on the latest stock price.

Belinda Tanoto, the daughter of RGE's founder, has built a 7% stake in Vinda via Beaumont Capital Fund in recent weeks, according to exchange filings. Should Tanoto acquire more shares in Vinda, she could potentially block any deal for the tissue paper maker, adding complexity to the talks of Essity's majority stake sale, the people said. Any new major shareholder will also have to work closely with Vinda's founder Li Chaowang, who owns about 21%, the people said.

A representative for RGE declined to comment, while a spokesperson for Essity said the strategic review was going according to plan and they would not comment further.

Founded by Indonesian entrepreneur Sukanto Tanoto in 1973, RGE's businesses span across pulp and paper, palm oil and production of viscose fiber, according to its website. The closely-held group operates in Indonesia, China, Brazil, Spain and Canada, with more than 60,000 employees.

Vinda owns one of China's top tissue brands and sells products under the Tempo and Tork brands. It also makes products for feminine care, baby care and incontinence. The company has 13 production bases across mainland China, Taiwan and Malaysia, its website shows. Swedish personal care product maker Essity said in April it has put its stake in Vinda under strategic review.

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