Shares in Paragon rose 10.5p, or 10%, to 116p in early trading after a report suggested that offers for the ailing mortgage lender could be tendered as soon as next week.
Those thought to be interested in the compnay include private equity firms Blackstone, Bridgepoint and one other financial investor. These three are currently carrying out die diligence.
JC Flowers and Apollo Management may also be keen on entering the race for the group, which has seen its shares collapse from a 52-week high of 730p.
A banker added that other bidders might submit an offer if the current due diligence process finishes inconclusively. Paragon was last night valued at £300m (US$590m).