UPDATE 5-Turkey's Koc sells Migros in private equity deal

(Adds comment from BC paragraphs 6-7, updates share prices)

By Emma Ross-Thomas and Mustafa Yukselbaba

ISTANBUL, Feb 14 (Reuters) - Turkey's Koc Holding KCHOL.IS has agreed to sell its 50.8 percent stake in retailer Migros MIGRS.IS to BC Partners for 1.98 billion lira ($1.7 billion), in the country's largest private equity deal.

Shares in Migros, Turkey's largest supermarket chain, fell 3.5 percent on Thursday as investors were disappointed with the sale price, which values the whole company at 3.89 billion lira.

"Our target for Migros was 4.1 billion lira, the deal price is 5 percent below our valuation," said Yonca Yagcioglu, an analyst at Ata Invest.

The price is also just 10 percent above Wednesday's closing market value which analysts said was not very attractive for minority shareholders. Analysts also noted that the deal was priced in volatile Turkish lira, making it a riskier bet.

It is private equity firm BC's first acquisition in fast-growing Turkey and tops buyout firm Kohlberg Kravis Roberts & Co LP's (KKR) [KKR.UL] purchase of shipper UN Ro-Ro last year in a deal valuing that firm at 910 million euros ($1.3 billion).

BC Partners is buying Migros with minority investments from DeA Capital (DEA.MI: Quote, Profile, Research), controlled by De Agostini SpA, and Turkven Private Equity. A senior partner at BC, Nikos Stathopoulos, told Reuters he would not rule out taking in another investor.

"We could allow in another investment partner if we felt it would add value," he said.