Arcapita, the Bahrain-based investment fund, has made an unsolicited approach to buy Peacocks, one of Britain’s largest discount fashion retailers, for about £700m. Sunday Telegraph

The fund, formerly known as First Islamic Investment Bank, buys companies and later sells on the equity to high-net-worth, Gulf-based investors.

The fund makes only investments that are compliant with Sharia law, which forbids interest payments.

Peacocks was taken private in December 2005 in an innovative £404m deal backed by Goldman Sachs, and hedge funds Och-Ziff and Perry Capital.

Peacocks has received at least five approaches for the business since it emerged that the company’s shareholders have been considering a sale, according to sources close to the situation. Those who have expressed an interest in buying the company are believed to include French private equity firm PAI and Cinven, Peacock’s previous owner.

However, sources familiar with the situation said a deal is unlikely to take place soon as there are no plans to run a formal sale process until the beginning of next year.