LVMH unit in talks with India's Gitanjali .

* L Capital in exclusive talks with India's Gitanjali -source

* Size of the deal could be $100-125 mln -report

PARIS, Feb 14 (Reuters) - L Capital, the investment firm co-funded by luxury group LVMH (LVMH.PA), is in exclusive talks to buy a stake in India's biggest jewellery retailer Gitanjali (GTGM.BO), a source close to the matter said on Monday.

"The talks with L Capital are well advanced ... and they are exclusive," the source said, declining to be named.

A report published by the Economic Times said L Capital wanted to buy a significant minority stake in Gitanjali that would give it control of the Indian company's branded jewellery and retail businesses. [ID:nSGE71A00V]

The report said the size of the deal could be between $100 million and $125 million.

However, a separate source said talks were being delayed by Gitanjali's plans to hive off units such as its retail business and would not be willing to sell a stake in its diamond business, from which it earns most of its revenues.

L Capital declined to comment, while Gitanjali said on Friday that global players and private equity funds had shown interest in the L Capital is funded by LVMH, the world's biggest luxury group, as well as by Groupe Arnault, the investment vehicle of LVMH Chief Executive Bernard Arnault. It also includes institutional and private investors.

The unit behind the deal would be L Capital Asia, the first source added, which raised funds last year for acquisitions in the region.

An associate of the same source said private equity firms TPG and KKR had also shown interest in a stake in Gitanjali but were no longer in the race.

Earlier this year, Gitanjali said it expected sales this year to reach $2 billion and planned to complete the acquisition of four Italian jeweller brands by February after acquiring Italian jeweller Valente Milano in September. [ID:nLDE70F07S]

Last autumn, L Capital, together with private equity firm Florac, acquired a majority stake in French fashion houses Sandro, Maje and Claudie Pierlot to help fund their expansion in the United States and Asia. but nothing was finalised yet, and it did not wish to comment specifically on L Capital.