* Poland is Pepco's biggest market
* Could be Poland's biggest IPO this year
* Sources value group at around 5 bln euros
* Says well positioned for growth
* Names Richard Burrows chairman
(Adds details from conference call)
By James Davey and Anna Koper
LONDON, April 26 (Reuters) - South African conglomerate
Steinhoff has chosen Warsaw over London to list shares
in its Pepco Group discount retailer business, in what could
become Poland's biggest initial public offering (IPO) this year.
The choice of Warsaw will be a boost to the Polish capital's
stock market which has seen an uptick in listings, but was
passed over by parcel delivery company InPost, which
chose to list in Amsterdam in January.
"Pepco was started in Poland, it is our home market, it is
our largest market... it is our most profitable market and it is
our emotional home," CEO Andy Bond told reporters when asked why
the company opted for Warsaw.
Asked whether a listing in zlotys would deter foreign
investors, CFO Nick Wharton said that the company took into
account the currency impact of being listed on any of the
European bourses and concluded that it was still the right place
to be.
Pepco trades from more than 3,200 stores across 16 countries
and is led by Bond, a former chief executive of Britain's Asda
supermarket chain. In Poland, it trades from more than 1,000
stores.
Earlier this month, Reuters cited sources saying that
Pepco, which owns Poundland in the United Kingdom as well as the
PEPCO and Dealz brands in Europe, was valued at around 5 billion
euros ($6 billion).
Pepco had said in March it was considering a listing in
either London or Warsaw.
Steinhoff is still battling the fallout from a 2017
accounting scandal and since 2019 the company and its creditors
have been evaluating options for Pepco.
It said it would sell at least 15% of Pepco's shares.
"We are strongly positioned to deliver significant long-term
growth, given our market leading customer proposition in the
most attractive sector of retail," said Bond.
He also highlighted opportunities to expand across the whole
of Europe and investment in infrastructure in recent years.
Pepco is targeting more than 1 billion euros in core
earnings within five to seven years by trebling its number of
stores.
The group does not, however, trade online.
Pepco has appointed Richard Burrows, chairman of British
American Tobacco, as its chair and will appoint four
other non-executive directors.
It also gave a trading update.
For the six months to March 31, revenue growth was 4.4%,
reflecting the opening of 225 net new stores.
However, like-for-like revenue fell 2.1%, due to COVID-19
pandemic related store closures.
Finance chief Wharton told reporters that the company
planned to introduce a "cautious" dividend policy in the future.
Bond said that Pepco was "open-minded" about M&A, but did
not have any specific plans.
($1 = 0.8256 euros)
(Reporting by James Davey, additional reporting by Anna Koper
and Alan Charlish in Warsaw; Editing by Paul Sandle, Sarah Young
and Jane Merriman)
British American Tobacco (BATS)