May 17, 2017 / 5:51 PM / 2 months ago

UPDATE 1-Steinhoff says to spin off African retail business

3 Min Read

(Adds details on assets owned, valuation, strategy)

FRANKFURT/JOHANNESBURG, May 17 (Reuters) - South African retail group Steinhoff on Wednesday said it was kicking off a process to separately list its African retail businesses on the Johannesburg stock exchange which it said would avoid those assets being undervalued.

The proposed listing is the latest move by billionaire Christo Wiese to bring more of his African retail assets under one roof to create a shopping giant.

Steinhoff said it would give emerging market investors the opportunity to independently assess its high profile and fast growing African brands.

Prior to the listing, Steinhoff will consolidate its African retail businesses, including Pepkor South Africa and rest of Africa, JD Group, Unitrans Automotive, Steinbuild, Poco South Africa and Tekkie Town, under a single holding company which bankers estimated could be valued at about $6 billion.

The announcement comes after Steinhoff and grocery retailer Shoprite called off a deal in February to create an African shopping giant after Wiese and other investors including state-owned pension fund the Public Investment Corporation (PIC) could not agree on the value of a share exchange.

Steinhoff, which sells beds and cupboards to less affluent shoppers, said it would continue to hold a controlling stake in the African unit following the listing, which will include a capital raise and be completed in the third quarter of 2017.

"It is the vision of Steinhoff to create a diversified multi-format listed retail company of significant size and scale with its roots in Africa," the company said in a statement.

"A separation of Steinhoff's emerging market retail business and developed market retail business will be a natural progression for the respective businesses given the divergent strategic focus in each market."

Steinhoff has operations across Europe, Australasia, the United States and Africa and has embarked on a series of acquisitions, the latest being U.S. bedding retailer Mattress Firm and Britain's Poundland.

Citigroup Global Markets Limited, Investec Bank Limited , Morgan Stanley & Co International Plc and Rand Merchant Bank have been appointed to advise on the proposed listing.

Shares in Johannesburg listed Steinhoff closed 1.33 percent down to 67 rand and fell 2.82 percent in Frankfurt. (Reporting by Christoph Steitz in Frankfurt and Nqobile Dludla in Johannesburg; Editing by Arno Schuetze and Elaine Hardcastle)

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