A group of powerful investors are preparing a £2bn takeover of one of the UK’s largest port operators in a move seen by some as a vote of confidence in the government’s levelling-up agenda.

The South Tees Development Corporation, which is run by the Tees Valley combined authority and headed by the local mayor, Ben Houchen, has reportedly been preparing a bid for PD Ports, which owns 12 ports and distribution sites across the UK.

The bid – said to be worth at least £2bn – has been backed by the pensions giant Legal & General, as well as the Pension Insurance Corporation and Credit Suisse, according to reports. Nearly half of the cash would be funded through debt, though the partners are expected to contribute hundreds of millions of pounds to fuel the takeover.

The cost has soared since earlier in the summer, when it was believed that Houchen and a group of investors backing the bid expected to pay just £1bn.

The investor group is expected to submit an initial offer for PD Ports within the next two weeks, just months after its existing owner, the Canadian asset management giant Brookfield, put the group up for sale. However, a source close to the matter told the Guardian that there have been expressions of interest from a range of investors globally, and that it is far too early to tell which bidder might come out ahead.

The prospect of a bidding war comes just weeks after the prime minister, Boris Johnson, and the chancellor, Rishi Sunak, wrote to asset managers and major shareholders in the City, urging them to shift money into “big bang” investment projects, including national infrastructure, to help boost the UK’s economic recovery after Covid.

PD Ports’ sites include Teesport, which is the fifth largest port in Britain by tonnage and considered the the gateway to northern England, a region that accounts for roughly 40% of the UK’s total industrial output. It is next to the Teesworks redevelopment site, which has been given low-tax freeport status after the chancellor unveiled further “levelling up” plans – meant to improve the economic prospects of communities across the UK – in the March budget.

Houchen, who was re-elected in May and is considered a key ally of the prime minister, has pledged to create thousands of jobs by demolishing the SSI Steelworks – which went bust in October 2015 – and transforming the area into a green energy hub. A successful bid for Teesport would build on Houchen’s ambitions.

Brookfield Asset Management and Credit Suisse declined to comment. Legal & General, the Tees Valley combined authority and the Pension Insurance Corporation did not immediately respond to requests for comment.