Goldman Sachs, JPMorgan and Morgan Stanley have started work on the deal, the people said.

It is likely Vipshop will aim to list between 5% and 10% of the company, which would raise up to $2 billion, according to one of those sources.

The sources could not be named because the information has not yet been made public.

Vipshop did not respond to a request for comment from Reuters on the appointment of the banks.

Goldman Sachs, JPMorgan and Morgan Stanley all declined to comment.

News of the mandates comes as China's markets regulator said on Thursday it had launched an investigation into companies linked to Vipshop over possible unfair competition.

The entities targeted are Vipshop (China) Co Ltd and Guangzhou Vipshop E-Commerce Co Ltd, the regulator said in a statement, without elaborating on the probe.

Vipshop will cooperate with the regulators' investigation, the company said on its official Weibo account on Thursday.. Vipshop shares fell in pre-open U.S. trading on Thursday by up to 7%.

The syndicate of banks working on the deal could be expanded closer to the time of the transaction launch, one of the sources said.

Vipshop was fined 500,000 yuan in December by China's State Administration of Market Regulator (SAMR), alongside Alibaba's Tmall and jd.com, for pricing irregularities revealed during the major Nov. 11 shopping festival in mainland China.

At least 13 Chinese companies listed in New York have carried out secondary issues in Hong Kong since November 2019. The transactions have raised $32.58 billion, according to Dealogic data.

(Reporting by Scott Murdoch)

By Julie Zhu and Scott Murdoch