One source said both titles were profitable and had seen strong growth in recent months, meaning strong interest was expected. Some suitors are believed to be interested in both the newspaper and the magazine, while others will bid for just one title.
RedBird IMI hopes to recoup the £600m it paid out last year. He previously valued The Telegraph at £510m and The Spectator at £90m. The sale process is being overseen by advisers from Raine and Robey Warshaw, George Osborne’s boutique investment bank.
A spokesman for the fund said: “This has been a thorough process which has involved speaking to stakeholders from around the world and it is no surprise that interest has remained extremely strong.”
An attempted takeover of RedBird IMI was thwarted earlier this year after ministers stepped in to block the sale of UK media assets to foreign nations.
The private equity fund took three-quarters of its funding from UAE Vice President Sheikh Mansour bin Zayed al-Nahyan, owner of Manchester City, leading to concerns about state influence in The Telegraph.
A spokesman for RedBird IMI added: “RedBird IMI has today confirmed that it intends to withdraw from the proposed acquisition of Telegraph Media Group and proceed with the sale.
“Our ownership would see the strongest editorial protection ever proposed for a British newspaper, along with much-needed investment. We continue to believe that this approach would bring wider benefits to The Telegraph and Spectator readers, their journalists and the UK media landscape.
“Unfortunately, it is clear that this approach is no longer feasible. Our focus is now on providing certainty to staff and readers of The Telegraph and The Spectator and securing the best value for assets that remain highly attractive.”
RedBird IMI added that it had held “constructive discussions” with ministers to ensure a “smooth and orderly sale” of the titles.
The launch of the sale process comes days after The Telegraph revealed a £278m black hole in its finances caused by previous owners, the Barclay family. The family raised money through loans during its ownership, but the company said the sum was unlikely to be repaid.
Investigators from HMRC and the National Crime Agency are trying to trace the money through a complex web of Barclay family companies as part of a review of seven years of potentially irregular transactions.
The £278m figure, billed as “commission” in the Telegraph’s latest accounts this week, pushed the company into a paper loss of £245m last year.
This was despite a five per cent rise in turnover to £268m, as total subscriptions rose by more than 300,000 to more than one million. Underlying profits, excluding extraordinary costs caused by the ownership crisis, were £60m, up 28%.
The losses will not impact the sale process as The Telegraph’s assets will be moved to a new holding company in a so-called “hive down” process.
The Barclay family lost control of the Telegraph last year over £1.2 billion in unpaid debts to Lloyds Banking Group. Lloyds had planned to sell the title by auction, but this was derailed when RedBird IMI helped the family repay the debt in full, with around £600m of the loan transferred into ownership.
The Barclay family regained ownership but did not control The Telegraph after the deal was blocked. The paper has since been overseen by three independent directors.
A spokesman for the Barclay family said: “During family ownership, the business has been managed responsibly and within all legal frameworks, with all accounts approved by auditors.”