Fresh from striking a $1.4 billion deal to buy Australian Venue Co in August, Asia private equity fund PAG Asia Capital is believed to be working on another deal in the market and some question whether Retail Food Group Limited (ASX:RFG) could be on its radar. The market value of food franchiser RFG, which owns Donut King and Gloria Jeans, is $128 million, with its share price at 5 cent, half the level it was at around the start of the year. Sources say that PAG is working on a transaction, and most believe RFG would be a natural fit.

Also within the Brisbane-based RFG's stable are Michel's Patisserie, Brumby's Bakery, Crust Gourmet Pizza and Rack 'Em Bones. Its shareholder with 12.53% is Regal, while Washington H. Soul Pattinson is also a substantial shareholder. Other possible buyers could be Australian private equity fund Adamantem Capital, which owns the company behind Boost Juice, Retail Zoo, or Anchorage Capital Partners or Allegro.

Weighing on the food sector is higher costs, with fast food chains raising prices. It makes it tough for a buyer to estimate the future earnings of RFG.