Africa’s largest clothing retailer has acquired a majority stake in Brazilian retailer Grupo Avenida. The transaction, which came into effect on Feb. 4, is expected to be worth around 3.5 billion rand ($225 million), and marks Pepkor’s first foray into Latin America.

Pepkor, majority owned by Steinhoff International, did not give an exact price for the 87 percent stake in Avenida it is buying from Kinea Private Equity and the company’s founding Caseli family, but said it would pay a cash amount equating to less than 4 percent of its own market capitalisation (which currently sits at about 88 billion rand, or $5.8 billion), suggesting an outlay of less than 3.5 billion rand.

Pepkor’s chief executive, Leon Lourens, said he was excited about this new chapter for the company and pointed to Avenida’s potential to become “a giant” in its country’s value retail sector.

Cape Town-based Pepkor, which owns the South African chains Ackermans, Pep and Tekkie Town and operates 5,400 stores across Africa, has been looking for ways to expand outside the continent. After over two years of research, the group says it found Avenida to be a solid strategic fit.

The Brazilian chain, which operates at the low end of the country’s retail market with a diversified product mix across its 130 stores, includes two major value apparel brands, Lojas Avenida and Giovanna.

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