French retail and luxury group PPR is raising upto 1 billion euros ($1.5 billion) to cut group debt by listing its Africa-focused CFAO distribution business in Paris next month.

PPR set a price range of 24.80 to 29.00 euros a share on Tuesday and said it would offer 31 million shares in the initial public offering, or about 50.39 percent of the share capital, with an option for up to 4.65 million more.

Paris traders said first price indications were at the low end but that more modest pricing could ensure the IPO's success.

It's really not expensive, one trader said. It's to be sure that the transaction goes well.

CFAO's businesses include selling cars and delivering drugs mainly in Africa. Consolidated revenue was 2.86 billion euros and recurring operating income was 277 million in 2008.

(The IPO) will provide investors with a vehicle to capture the growth potential of the African continent, CFAO management board Chairman Richard Bielle said.

Even though it will be listed in Paris, the company should qualify for entry into many international equity funds investing in Africa's frontier markets since most of its revenue derives from the continent.

Shares in PPR were 1.6 percent lower at 82.54 euros by 1300 GMT, underperforming a 0.5 percent weaker French benchmark CAC 40 index .FCHI.

It is worth noting that the company may start pricing low in order to generate more interest and then raise the range, one trader added.

The offer will run until Dec. 1, with pricing expected on Dec. 2 and trading on Euronext Paris due to start on Dec. 3, PPR said.

The IPO follows the flotations of Polish utility PGE PGEPa.WA, Europe's largest this year, and Dutch insurer Delta Lloyd. They raised $2.1 billion and $1.5 billion, respectively.

Analysts have said the listing will unlock shareholder value as many investors outside France are not familiar with CFAO's business.

The listing ... is intended to bolster CFAO's growth strategy, PPR said. In particular, it will reinforce CFAO's prominence vis-a-vis its customers and will provide access to new sources of financing.

Net proceeds will go to PPR unit Discodis, while CFAO will not receive any proceeds of the offering, the companies added.

In terms of the attractiveness of the operation, everything will depend on the price, one fund manager said. Subsequently I think ... CFAO is ancient history for PPR from now on, unless the IPO really goes very badly, but that seems unlikely to me.

BNP Paribas, Calyon, Goldman Sachs and Societe Generale are acting as global coordinators, joint lead managers and joint bookrunners. Lazard-Natixis is senior co-lead manager. ABN Amro, HSBC and UBS are co-lead managers.

(Additional reporting by Juliette Rouillon; Editing by David Cowell)

($1 = 0.6685 euro)