HONG KONG/SYDNEY (Reuters) - Carlyle Group and KKR have advanced in the sale of Transpacific Industries Group Ltd's (>> Transpacific Industries Group Ltd.) waste management unit, in a deal that could fetch around NZ$880 million (443.0 million pounds), people familiar with the matter told Reuters.

The deal comes as Transpacific Industries, a recycling, waste management and industrial services company, is selling assets in New Zealand to focus on growing its Australian business as part of a broader corporate revamp.

The biggest M&A deal on record in New Zealand's waste and waste management industry is expected to be benchmarked to private equity firm Ironbridge Capital's sale this year of its New Zealand waste company, EnviroWaste Services Ltd. That business was sold to Hong Kong's Cheung Kong Infrastructure Holdings Ltd (>> Cheung Kong Infrastructure Holdings Ltd.) for NZ$501 million including NZ$11 million in debt.

Australian private equity firm Archer Capital is also among the bidders that have advanced in the auction, the people said.

The deal is the largest takeover in New Zealand since Chinese appliance m

aker Haier paid NZ$927 million in November 2012 for the 80 percent of Fisher and Paykel Appliances Ltd it did not own.

Carlyle (>> Carlyle Group LP), KKR (>> KKR & Co. L.P.) and Archer are working with banks to put together debt packages to back their bids, the people said. The three firms declined to comment.

Final bids are expected in February.

(Additional reporting by Sharon Klyne of Basis Point; Editing by Michael Flaherty and Stephen Coates)

By Stephen Aldred and Jackie Range