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UPDATE 1-Owner of Sandro, Maje fashion labels valued at $2 bln in Paris listing

listing@ (Adds details of funds raised, free-float)

PARIS, Oct 19 (Reuters) - France's SMCP <IPO-SMCP.PA> will price its stock market flotation at 22 euros per share, it said on Thursday, giving the fashion firm behind the Sandro and Maje labels a market value of around 1.7 billion euros ($2 billion).

The group, which also houses clothing brand Claudie Pierlot, will remain around 51 percent owned by China's Shandong Ruyi following the initial public offering, while private equity firm KKR will sell its 10 percent holding.

Paris-based Sandro, Maje and Claudie Pierot (SMCP), which is using proceeds from the listing to back its expansion and pay down debt, touts itself as an "affordable luxury" company.

SMCP's clothes - such as dresses priced in the $200-$400 range - are more expensive than high-street retailers but it also operates a nimble production model more akin to the world of fast-fashion that of the top-end luxury labels.

SMCP is looking to grow more in China, where recovering demand from middle-class consumers is giving retailers a lift, and like many peers it also wants to develop online sales.

The IPO raised around 541 million euros for the company and selling shareholders, and SMCP said this could increase to 623 million euros if over-allotment options are exercised on the back of strong demand.

Some of SMCP's managers - the founders had around 8 percent of the firm before the IPO - banked 5.9 million euros from selling shares, the company said, while KKR took home 148 million euros. Shandong Ruyi raised 261 million euros and said the funds would be used to buy the Chinese government's stake in its Yinchuan Ruyi textile factory.

The company, which aims to open between 80 to 90 stores a year between 2018 and 2020, also raised 127 million euros from issuing new stock. It will have a free float of 33.1 percent.

Shares in SMCP will start trading in Paris on Friday in the form of "promesses d'actions", or a type of share right.

($1 = 0.8446 euros) (Reporting by Sarah White; Editing by Mark Potter)