Out of Africa, into Euronext for PPR's CFAO

By Lionel Laurent

PARIS (Reuters) - French retail and luxury group PPR

is set to raise up to $1.5 billion by listing its Africa-focused distribution unit CFAO in Paris next week, raising the profile of a company little known by international investors.

"Many investors outside of France are not even familiar with (CFAO's) activity, let alone its value," Sanford C. Bernstein analyst Luca Solca said when the plans for an initial public offering were unveiled last month.

Since then, the buzz around the French company, which has its origins in west Africa, has made it a more familiar name, but investors still consider it "very exotic", Solca said.

The irony is that CFAO is the best-performing general retail asset in the PPR stable, according to Solca. During the past five years, he says, CFAO has achieved annual operating margins of around 8 to 10 percent, several points ahead of better-known units such as Fnac, Conforama and Redcats.

CFAO has done this by outgrowing its origins as a 19th-century French colonial trading company -- selling goods like leather and tobacco in a handful of West African countries -- to become a multinational retailer selling everything from automobiles and pharmaceuticals to lifts and soft drinks.

The company began life in 1852, under the name Verminck, taking the name Compagnie Francaise de l'Afrique Occidentale in 1887. According to historian Hubert Bonin, CFAO targeted British-speaking colonies in the early 1900s and by 1952 had spread across 18 countries.

CFAO's biggest market is still former French colonies in Africa, though English and Portuguese-speaking African countries account for just under 15 percent of sales and could grow if CFAO continues to expand after its IPO scheduled for December 3.