Steinhoff shares dropped 13.64% at the market open. Pepkor shares dipped 1.02%.
Following the sale via an accelerated book-building process, Steinhoff's interest in Pepkor – owner of brands Pep, Ackermans, Shoe City, JD Group and The Building Company – will reduce to about 43.8% from 51%.
"Proceeds from the placing will in due course be used to de-leverage Steinhoff's capital structure," the retail holding company, which also has operations in Europe, the United States and Australia, said.
The company added it continued to view Pepkor as a strategic investment for the group.
Pepkor has been doing well recently, with shoppers trading down to cheaper brands as high inflation squeezes spending.
Steinhoff has been looking to reduce its group services debt of €10bn through asset sales and listings following a 2017 accounting scandal that prompted about 90 separate legal claims against it.
Last month Steinhoff, which has a primary listing in Frankfurt, raised €315.2m from selling a 6.6% stake in its European retail group Pepco.
