The deal values Etro at about 500 million euros ($590 million), confirming reports in Italian newspapers La Repubblica and Il Sole 24 Ore. In a statement, an Etro representative said that L Catterton was taking a majority stake in the company, while the Etro family would retain "a significant minority interest". The statement did not go into specifics and gave no financial details.
Gerolamo Etro, who founded the company in 1968, will be the chairman and the deal is set to be closed by the end of the year, the statement said.
"We are thrilled to be working with the L Catterton team who will bring their in-depth knowledge of the fashion sector and an experience in the international development of important brands, allowing our company to reach new heights," the firm said.
One of the sources said Etro's four children would stay on as shareholders with a 40% stake and would remain owners of Etro's real estate property and directly operated stores. L Catterton recently bought German sandal maker Birkenstock. LVMH, which owns a string of Italian labels including jeweller Bulgari, also boosted its stake in Italian luxury shoemaker Tod's to 10% in April.