The other two contenders are well-entrenched ruling BJP and the main opposition Congress.
Keshubhai's group has indicated that he would form a party, and a formal announcement is likely later this month.
"It is more than 100 per cent certain that Keshubhai will form a new party and we will contest the elections on all 182 seats. There is no doubt that Keshubhai will lead the party and the state will have a three-way contest," said Patel's supporter Gordhan Zadafia, a former minister in Modi government.
BJP is in power in Gujarat since 1995. Regional parties grew strong in other parts of the country in the last two decades, but the trend was not witnessed here.
Attempts to provide a regional choice failed. Former Chief Minister and Congress leader Chimanbhai Patel formed Janta Morcha in 1980s, but realised soon that it was a non-starter and went back to Congress.
Another former CM, Shankarsinh Vaghela of BJP, floated Rashtriya Janta Party in 1986. He managed to get only four seats out of the total 184, and later joined Congress.
In the decade before, Sanstha Congress of Morarji Desai had some success, as it came to power after the Emergency in alliance with four other parties, trouncing Congress (I).
A BJP leader, speaking on the condition of anonymity, said Gujarat had never accepted regional fronts. "Attempts were made in the past but they have not been successful and Patel group's attempt will not succeed... The contest is between BJP and Congress," he said.
But Zadafia differed. "People are always in search of credible option and Indian democracy has shown that sooner or later the right set of leaders is accepted by the people," he said.
"It is also totally wrong to say that regional parties have not been successful in the state. We had seen that BJP was a third party in initial years when Congress (I) of Indira Gandhi and Sanstha Congress of Desai were main contenders. Later BJP was accepted by the people," he added.
Congress, on the other hand, hopes that Patel's rebellion would help it. "We campaigned hard in Uttar Pradesh in the recent elections but people voted Samajwadi Party to power. The reason was people thought SP to be the alternative to BSP. In the same way, voters, who are very smart, will vote for an alternative here...The only alternative to Modi now is Congress," said state Congress chief Arjun Modhwadia.
BJP camp is maintaining silence on the issue of Keshubhai's impending exit. Party general secretary Vijay Rupani said that Keshubhai group was yet to announce its plans, and BJP would react only afterwards.