Steinhoff International Holdings NV is considering the sale of about a quarter of Pepco Group. Picture: SUPPLIED
INTERNATIONAL - Steinhoff International Holdings NV is considering the sale of about a quarter of Pepco Group through an initial public offering that could value the European retailer at more than 4 billion euros ($4.4 billion), according to people familiar with the matter.

The listing could take place in the first half of next year, said the people, who asked not to be identified as the move hasn’t been announced. JPMorgan Chase & Co. has been hired as one of the bookrunners, three of the people said, while Goldman Sachs Group Inc. has also been appointed, one of them said.

The sale of shares in Pepco would represent the latest in a string of asset sales for Steinhoff, which narrowly avoided collapse following an accounting crisis in late 2017. The South African owner of chains such as Mattress Firm in the U.S. has been realizing funds to shore up its balance sheet and negotiated a debt restructuring with lenders earlier this year.

Steinhoff shares jumped as much as 4.5% on further news of the IPO plans, and traded 0.7% higher as of 2:24 p.m. in Frankfurt. The stock remains more than 98% lower than before the scandal erupted.

Pepco Group has about 2,700 outlets, including the PEPCO chain of Eastern European discount clothing stores and Poundland in the U.K. The unit has been among Steinhoff’s best performers even after the scandal erupted, with earnings growth for the year through September expected to have been about 18%.

Pepco Group changed its name last month from Pepkor Europe. Bloomberg News first reported the IPO plans in August.

Steinhoff had considered selling Pepco shares in London and Warsaw, but may now only choose Poland, one of the people said. No final decision has been made, and Steinhoff could yet pursue other options for the business, the people said.

A representative for Steinhoff declined to comment. JPMorgan and Goldman Sachs declined to comment.

PEPCO has been one of fastest-growing chains in eastern Europe, expanding the customer base from cost-savvy shoppers in smaller towns to bigger cities. The chain has expanded into Romania and other markets and plans to add about 300 stores a year across its 14 countries.