Essity's 51.59% stake in Vinda was worth HK$12.19 billion ($1.6 billion) as of Tuesday, according to Reuters calculations.
Vinda said the stake sale may lead to an offer for the company.
The Swedish company confirmed discussions are ongoing with a number of interested parties and that no decision regarding the stake sale had yet been made.
Essity kicked off a bidding process for its majority stake in the company around mid-year.
The sale process has drawn bidders including Brazilian pulp maker Suzano and private equity firms Bain Capital, CVC Capital Partners and DCP Capital, Reuters reported in September.
More recently, Royal Golden Eagle (RGE), a Singapore-headquartered group owned by Indonesian billionaire Sukanto Tanoto, and Indonesian pulp and paper company Asia Pulp & Paper (APP) have emerged as serious bidders in the deal discussions, two sources with knowledge of the matter said.
RGE declined to comment on Tuesday. APP said it has no comment.
($1 = 7.7949 Hong Kong dollars)
(Reporting by John Biju in Bengaluru, Kane Wu in Hong Kong and Yantoultra Ngui in Singapore; Editing by Stephen Coates and Miral Fahmy)
By John Biju, Kane Wu and Yantoultra Ngui
