* Abilio Diniz buys 10 pct stake in Carrefour Brazil

* Diniz pays about 1.8 billion reais ($663 million)

* Also has option to raise stake to max 16 pct

* Brazilian business could be listed in future

* Carrefour raises cash for Brazil expansion, Diniz back in
retail

(Adds details, stock, analyst, sources comments)

By Dominique Vidalon and Andrew Callus

PARIS, Dec 18 (Reuters) – Carrefour has sold a 10
percent stake in its Brazilian business to billionaire Abilio
Diniz, in a first step towards a possible separate listing, as
Europe’s largest retailer looks to raise cash to accelerate
growth in its second-largest market.

With its core French market on the mend, Carrefour head
Georges Plassat has long said he wanted to speed up expansion in
fast-growing Brazil and China, and that a flotation in Brazil
was one of its funding options.

If Carrefour goes ahead with a Brazilian listing, it would
be joining a trend among big Western retailers to sell or list
parts of their more profitable emerging market businesses.

Germany’s Metro for instance was planning to list
its Russian cash-and-carry business but had to shelve the plan
due to the Ukraine crisis, while Britain’s Tesco spun
off its China operations this year into a separate joint
venture.

Diniz’s investment company Peninsula bought a 10 percent
stake for about 1.8 billion reais ($663 million), the
France-based retailer said in a statement on Thursday,
confirming what a source with knowledge of the situation had
said on Wednesday.

Peninsula also has the option to raise its stake to a
maximum 16 percent within five years.

Carrefour said the deal could in future allow a listing on
the Brazilian stock exchange.

Analysts had estimated the Brazilian business to be worth up
to 9 billion euros, whereas the deal implies a figure slightly
over 5 billion.

Analyst Antoine Parison at investment bank Bryan Garnier
said the value was disappointing, though a partnership with
Diniz was probably one of the best that could be hoped for,
given his knowledge of the market and experience as former
chairman of Carrefour’s main competitor in Brazil.

By 0955 GMT, Carrefour shares were up 1.6 percent, in line
with the European retail sector.

The deal marks 77-year-old Diniz’s return to retailing and
closer ties with the Carrefour group, in which he has built a
stake of a little under 3 percent, according to sources.

The eldest son of the founder of GPA SA,
Carrefour’s Brazilian arch rival owned by French retailer Casino
, Diniz left GPA in September last year to turn around
foods maker BRF SA.

In 2011, Diniz fell out with Casino after he secretly sought
to broker a merger with Carrefour. The deal ultimately fell
through.

Carrefour has a 40-year history in Brazil with 256 stores
ranging from hypermarkets to Carrefour Express stores. It had 34
billion reais of sales there in 2013, about an eighth of its
total group revenue.
($1 = 2.7145 Brazilian reais)

(Additional reporting by Guillermo Parra-Bernal and Alexandre
Boksenbaum-Granier; Editing by Leigh Thomas and David Holmes)