Private equity circles MoneyGram: sources

Carlyle Group LP and TPG Capital LP are among private equity firms vying for MoneyGram International Inc , the world's second-largest money transfer company, four people familiar with the matter said this week.

Bain Capital LLC and GTCR LLC are also participating in the auction for MoneyGram, which is being run by Bank of America Corp and is currently in its second round of bidding, the sources said.

Two industry players are also in contact with MoneyGram about a potential takeover, one of the sources said. The identity of these parties could not be learned.

MoneyGram, Bank of America, Carlyle, TPG, Bain and GTCR declined to comment.

MoneyGram shares jumped 2.5 percent on the report, giving the company a market value of $1.3 billion. Through Thursday, the shares had risen 65 percent this year, compared with a 13 percent rise for the Nasdaq Composite Index .

The news service Dealreporter reported on June 18 that MoneyGram was exploring a sale. The company's stock was already on the rise on expectations shareholders would get more of the company's cash flow as dividends.

With more than 321,000 locations in retailers, post offices and banks in 198 countries and territories, MoneyGram is second only to Western Union Co among money transfer providers.

MoneyGram started as a small money order company in Minneapolis in 1940 and now boasts more than twice the locations of McDonald's Corp , Starbucks Corp , Subway and Wal-Mart Stores Inc combined.

The Dallas-based company faced a serious liquidity crunch in 2008 after investing in subprime and other risky asset-backed securities, but it was rescued through a $1.5 billion equity and debt deal clinched with Goldman Sachs Group Inc and private equity firm Thomas H. Lee Partners LP.

MoneyGram staged a comeback and in 2012 reported record sales of $1.34 billion, but its profits suffered as a result of legal expenses incurred in consumer fraud cases involving its agents.

The 2008 recapitalization has left Goldman Sachs and Thomas H. Lee owning about 70 percent of the company. An outright sale of MoneyGram could allow the two firms to exit their investment faster, and potentially more lucratively, than through smaller secondary offerings of shares over time.

(Additional reporting by Jessica Toonkel in New York; Editing by Gerald E. McCormick and John Wallace)