PPR’s CFAO Offering Raises $1.21B

PPR SA has raised 806 million euros, or $1.21 billion at current exchange rate.

PARIS — PPR SA has raised 806 million euros, or $1.21 billion at current exchange rates, from the stock market listing of a majority stake in CFAO, its African distribution business.

This story first appeared in the December 3, 2009 issue of WWD.  Subscribe Today.

The French retail-to-luxury group sold 31 million shares, representing 50.39 percent of CFAO’s capital, at 26 euros, or $39.13, each — just below the midpoint of an indicated price range of between 24.80 euros and 29 euros, or $37.32 and $43.64.

CFAO said its initial public offering, which was oversubscribed, attracted strong interest from institutional investors both in France and abroad.

“The strong demand…shows the confidence of investors in the performance and development prospects of CFAO as well as the growth potential of the African continent,” stated Richard Bielle, president of CFAO’s management board.

If PPR decides to exercise its option to sell a further 4.65 million shares, the amount raised by the company could increase to 926.9 million euros, or $1.39 billion.

The proceeds from the listing of CFAO will be used to strengthen PPR’s balance sheet and reduce its debt, which stood at 6.4 billion euros, or $8.5 billion, at the end of June.

CFAO is due to start trading today in the first IPO in Paris in two years, with a market capitalization of 1.6 billion euros, or $2.4 billion.

The spin-off of CFAO, first announced in October, comes as François-Henri Pinault, chief executive officer of PPR, is looking to shift the focus exclusively on consumer and luxury brands — a move expected to lead to further divestments. Among the retail operations Pinault plans to sell are furniture chain Conforama and Fnac, a books and electronics retailer. Analysts have estimated the two units could yield about 4 billion euros, or $6 billion, which PPR is expected to use to shop for apparel and accessories brands in a move to create a new mass-market division mirroring the luxury goods unit, Gucci Group.

Operating in 34 countries in Africa as well as Vietnam, CFAO sells an array of products ranging from pharmaceuticals to computers, cars and beer. The company delivered sales growth of more than 10 percent in the last few years, although sales dropped 9.3 percent in the third quarter, due in large part to lower car sales.