New York, Sept. 28 (Reuters): Power-plant operator NRG Energy Inc is in advanced discussions to purchase Texas Genco Holdings Inc in a deal expected to be valued at $5 billion or more, the Wall Street Journal said today.

Citing people familiar with the matter, the newspaper said NRG would use a majority of cash, with some stock, to buy Genco, which is owned by funds managed by four private equity investment companies.

NRG would also assume more than $2 billion of Genco debt.

Negotiations are continuing and could fall apart, the Journal said.

As recently as last week Genco was expected to file for an initial public offering of shares, a path it could still pursue.

Other bidders for Genco also could emerge.

The potential deal shows some of the lavish returns that private-equity firms are delivering to their investors, the Wall Street Journal said.