One of the world's largest buying companies has become the main competitor in the acquisition of the company behind the Northern Rail franchise in a deal worth about 2.5 billion euros.
Sky News has learned that Carlyle has entered into exclusive negotiations to buy Arriva Group, which operates in 14 European countries and employs 53,000 people.
The owner of Arriva, the German state transport group Deutsche Bahn, has been considering selling or floating the company for several months.
A final decision is unlikely to be made before the end of the year, with uncertainty about the outcome of the Brexit process a factor in Deutsche Bahn's thinking.
However, City sources said on Friday that Carlyle was now the "clear pioneer" in buying Arriva if the German group decides to make a definitive sale.
A source said late Friday that Northern Rail's controversial deal would be excluded from Carlyle's acquisition of Arriva.
A formal offer is expected to be presented this month and will be considered by Deutsche Bahn board members in December, they added.
Rival bidders who have previously shown interest in the dual carriageway process, including Apollo Global Management and several multinational transportation companies, could still renew their appetite for an acquisition.
Reports in recent months have indicated that Deutsche Bahn was seeking offers in excess of € 3 billion (£ 2.6 billion), which could mean that any formal offer from Carlyle is deemed inappropriate to close a deal.
Deutsche Bahn owns Arriva, one of Britain's largest public transport operators, since 2010, when it struck a £ 1.6 billion takeover deal.
Founded in 1938 at a motorcycle shop in Sunderland by the Cowie family, Arriva has gradually become a bus and train operator with a presence in much of Britain.
It currently operates in countries such as the Czech Republic, Croatia, Denmark and Poland and is proud to carry 2 billion passengers on its network each year.
Arriva also trades in the Netherlands, which is reported as the most likely destination for a stock market listing.
In the United Kingdom, Arriva faced severe criticism of the Northern Rail crisis, which has been affected by punctuality and capacity problems.
Transportation Secretary Grant Shapps recently said he had asked his employees to draw up contingency plans to nationalize the franchise, which operates 2800 services a day.
A mismanaged revision of Northern Rail's schedule last year caused chaos for many thousands of passengers.
Arriva also clashed with the government – mainly Shapps predecessor Chris Grayling – over the process of granting the East Midlands railway franchise.
In the bus sector, Arriva has an 18% share in the London market and a 15% share in the regions.
The acquisition of the company would be a big gamble for Carlyle, which is facing the fact that the remainder of its stake in the eliminated minicab company Addison Lee is taken over by its creditors.
Arriva's rival, FirstGroup, is also facing a shake-up, with a proposal to sell its bus division in the United Kingdom following a campaign led by an activist investor.
Sources indicated on Friday that if a deal was reached, Carlyle would use capital from several of its different funds to finance it.
The private equity group could also seek to team up with some of its own fund investors – or limited partners – to contribute funding.
Arriva and Carlyle declined to comment, while Deutsche Bahn said it had always indicated its intention to proceed with a dual-assignment process.
Deutsche Bank is advising the German transport company.