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By Vibhuti Sharma and Aditya Kalra

MUMBAI, Jan 13 (Reuters) - Indian footwear firm RedTape's founders are soliciting interest from Blackstone and KKR as they look to sell a majority stake or even their entire holding worth nearly $510 million, according to sources and a document seen by Reuters.

Shares in RedTape rose as much as 16% on the Reuters report, its biggest ever intraday gain, before closing 11% higher.

Launched in 1996, RedTape REDT.NS competes with global giants such as Nike NKE.N, Adidas ADSGn.DE, Bata India BATA.NS and Campus Activewear CAMU.NS in a sector set to grow 11% a year to $21 billion by 2028, market research firm 1Lattice estimates.

RedTape's founding family, the Mirzas, have appointed global consultancy Ernst & Young as the exclusive financial adviser for "divestment of their stake", a document dating from December detailing the planned transaction shows.

EY has reached out to private equity firms Blackstone and KKR to explore potential offers for the family's stake, said two of the three sources.

It is seeking non-binding indicative offers, added one of the three sources, who all sought anonymity, as the process is confidential.

RedTape's Managing Director Shuja Mirza and his father, the company's chairman, Rashid Ahmed Mirza, did not respond to a request for comment from Reuters.

EY and KKR declined to comment. Blackstone did not respond to Reuters queries.

POPULAR FOR LEATHER SHOES, SNEAKERS

Family-run Indian companies are luring foreign investors for their strong grip on domestic markets.

Singapore's state investor Temasek acquired a 10% stake in the snacks business of India's Haldiram's last year, valuing the company at about $10 billion.

While two of the sources said the Mirzas are eyeing the sale of at least a majority stake, they added they could consider selling the entire stake of 71.8% if they secure a good deal.

The third source said the family was keen only on the sale of the full stake.

At Monday's closing price, a stake of 50% of the company would be worth $355.58 million, while the entire 71.7% would be worth $509.42 million.

It was not immediately clear why the Mirzas were seeking to sell their stake. RedTape shares have been under pressure since early 2025 and lost 43% last year.

Popular for its leather shoes, RedTape has also diversified into sneakers, shirts, wallets and belts.

It sells items in more than 600 Indian retail stores and has a presence in 14 countries, from Australia to Britain and the United States, Australia, as well as in Europe and West Asia, the company says on its website.

RedTape earned revenue of $223.91 million in the fiscal year 2024/25, up 9.7% from a year earlier, though profit fell 3.5% to $18.84 million.

(Reporting by Vibhuti Sharma in Mumbai and Aditya Kalra in New Delhi; Additional reporting by Additional reporting by Bharath Rajeswaran; Editing by Clarence Fernandez and Alexander Smith)

((Vibhuti.Sharma@thomsonreuters.com;))