(Bloomberg) -- Pepkor Holdings Ltd., Africa’s largest clothes retailer, agreed to buy a majority stake in Brazil’s Grupo Avenida SA for less than 3.2 billion rand ($208 million) to expand into South America for the first time.

The deal for 87% of Avenida represents less than 4% of Pepkor’s market value of 80.4 billion rand, Cape Town-based Pepkor said in a statement Thursday, without being specific. The founding Caseli family will retain the rest of the fashion retailer, while Kinea Private Equity will exit the business.

Bloomberg reported the story late Wednesday.

“Pepkor has proven to be successful in the international expansion of its business model in the past and we look forward to entering the Brazilian retail market,” said Pepkor Chief Executive Officer Leon Lourens. 

The shares declined 0.7% in early trade in Johannesburg, though have rallied 47% in the past 12 months.

Pepkor, which owns the South African chains Ackermans, Pep and Tekkie Town, has been looking for ways to expand outside the African continent after failing to buy back into European discount retailer Pepco Group, which listed in Warsaw in May. 

Pepkor and Pepco were part of the same company when bought by Steinhoff International Holdings NV in 2014, though the former parent spun off the Africa side some years later before being engulfed in an accounting scandal.

Pepkor must “find new ways of expanding,” Lourens said in an interview last year. An acquisition outside its home market would most likely be in a company that’s not too big, has proved itself, needs capital and has good management, he said.

Avenida has 130 stores in Brazil and specializes in low-cost clothing, in line with Pepkor’s main focus. The 42-year-old chain considered an initial public offering last year before abandoning the plan. 

Pepkor is still growing in its home market and intends to open 300 stores annually in South Africa for the next three to five years.

(Updates with share price in fifth paragraph)

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