* Listing values STAR at 75 billion rand
* Shares trading at 21.55 rand, above 20.50 IPO price
* Parent company in middle of German fraud investigation (Adds CEO, fund manager comments)
JOHANNESBURG, Sept 20 (Reuters) - Steinhoff's African subsidiary surged nearly 10 percent on its market debut on Wednesday, as investors looked past its parent company's legal wrangles in Europe and piled into the continent's retail powerhouse.
Steinhoff Africa Retail, or STAR, listed a day before a Dutch court is due to hear a petition calling for an investigation into the annual accounts of Steinhoff, which is already under scrutiny for alleged accounting fraud in Germany.
STAR climbed as high as 22.46 rand on Wednesday, 9.6 percent above its initial public offering (IPO) price of 20.50 rand. The IPO raised 15.3 billion rand ($1.2 billion), making it the biggest in Africa this year and the third biggest ever.
By 1245 GMT, the stock was changing hands at 21.55 rand, giving STAR a market capitalisation of 75 billion rand, dwarfing its nearest rival, budget clothing retailer Mr Price Group , which was valued at about 50 billion rand.
Steinhoff, which owns Poundland in Britain, Mattress Firm in the United States and Conforama in France, spun off its African chains to get a higher rating for its developed market businesses and to give investors keen on exposure to Africa a chance to invest in STAR directly.
"The market knows about Steinhoff issues in Europe and takes comfort in Steinhoff statements that they quite clearly refute these claims," said Wayne McCurrie, fund manager at Ashburton Investments. "Why do we like STAR? It's one of the top retailers in Africa and there's potential big benefits from taking control of Shoprite in terms of supply chain."
Faced with low interest rates across much of the developed world, fund managers have been ploughing money into emerging markets for months, at levels similar to those seen during the so-called commodity super cycle.
The STAR flotation also came just weeks after German monthly Manager Magazin named Steinhoff Chief Executive Markus Jooste as among those being investigated for suspected accounting fraud in a case that dates back to 2015.
Steinhoff, the world's biggest furniture retailer after Sweden's IKEA, has denied all the allegations and also expects the Dutch court to throw out a petition from OM Handels GmbH and MW Handels GmbH, owned by a former joint venture partner.
STAR is also in the middle of buying control of Shoprite , Africa's biggest grocery retailer, in a share deal worth 35.5 billion rand that would give it exposure to shoppers in South Africa and 14 other African markets, including the fast-growing consumer hubs of Nigeria and Angola.
STAR Chief Executive Ben la Grange, an instrumental figure in Steinhoff's acquisition spree of the last decade, said although STAR would own about 50 percent of the Shoprite voting rights it would not dictate the retailer's strategic direction.
"It's the start of a beautiful story," said STAR's La Grange, a 42-year-old who doubles up as finance chief at parent company Steinhoff.
"The more exciting part is when the transaction with Shoprite is implemented, we would be able to start specific projects to the benefit of STAR and Shoprite shareholders."
He declined to give details about such projects.
STAR, mainly made up of clothing, shoe and textile businesses Ackermans and Pep, is an African retail giant with annual sales of about 53 billion rand.
Steinhoff owns about 78 percent of STAR. ($1 = 13.2895 rand) (Additional reporting by Eddie Dunthorne in London; editing by David Clarke)