Greg Hayes, speaking at an investor meeting in Chicago, said the auction process remains "robust" with "lots of interest" from private equity buyers, but also from other industrial companies.

The diversified conglomerate is selling the industrial businesses of its Hamilton Sundstrand unit in an effort to fund its $16.5 billion takeover of aircraft components maker Goodrich Corp. People familiar with the matter have said these units combined could be valued at more than $3.5 billion.

"Some of the strategics are having a little bit more difficulty with their own stock price down but these are great properties and I think with the cost of capital where it is today, it's a pretty compelling case for somebody that has a strategic fit that these businesses really are worth the price," Hayes said.

Private equity firms TPG Capital , Carlyle Group and BC Partners remain involved in the process and are considering buying both pump and compressor businesses, people familiar with the matter said this week.

Other bidders are evaluating offers for either pumps or compressors only, the people said.

Dover Corp and Atlas Copco are interested in buying the pump business, while Gardner Denver Inc, Onex Corp and Advent International among others have been pursuing compressors, they said.

Flowserve Corp and SPX Corp also expressed interest in buying the pump business, according to the people familiar with the matter, but two of the people said these companies' interest has cooled in recent weeks.

The pump business for sale has roughly $200 million in estimated 2012 earnings before interest, tax, depreciation and amortization (EBITDA) and may go for as much as 12 times EBITDA, sources said previously.

The compressor business has some $160 million in forward EBITDA and may be sold for 8 to 9 times EBITDA, the sources have said.

It remains to be seen if United Tech will choose to sell both pumps and compressors businesses to a single buyer, or sell them separately. The company is expected to weigh the potential valuation gains from selling them to different buyers, versus the simplicity of a deal in selling everything in one transaction, the people said.

Representatives for Carlyle, TPG, BC Partners and Advent International declined to comment while Onex did not have an immediate comment. Dover, Atlas Copco, Flowserve, SPX and Gardner Denver all declined to comment.

MORE ASSET SALES

"We would hold onto the Hamilton Sundstrand businesses if we can't get what we consider to be a fair and reasonable price," Hayes said.

"I think it's still going to happen this year, I think we would have an announcement in the third quarter and close in the fourth."

The company may have a bit more selling to do this year, Hayes said, adding that it has recently completed a review of its fire and security operations - which make sprinkler systems and alarms - and is considering selling some of that portfolio as well.

"It'll be a very focused look at the portfolio," he said. "They're pretty much done with the analysis and over the next couple of months you'll hear about more divestitures."

Hayes also said United Tech is evaluating "strategic alternatives" for its fuel-cell business.

(Reporting by Soyoung Kim and Scott Malone, additional reporting by Greg Roumeliotis; Editing by Phil Berlowitz)

By Soyoung Kim and Scott Malone