(Adds further background on London IPO market, B&M valuation)
By Freya Berry
LONDON May 30 (Reuters) - British discount retailer B&M is to be valued at up to 2.9 billion pounds ($5 billion) in its London share flotation, two sources familiar with the matter said on Friday, making it one of the biggest UK retail listings of the year.
The chain, which sells everything from hanging flower baskets to telvisions and breakfast cereals, has set its price range for its initial public offering at 230-290 pence a share, the sources said.
The price range gives B&M, which has been owned by U.S. private equity firm Clayton Dubilier & Rice since 2012, a market value of between 2.3 and 2.9 billion pounds, the sources said.
The listing will test what appetite remains for new share offerings by UK retail companies. A string of firms from Poundland to Pets at Home have already floated this year, but niche clothing chain Fat Face last week pulled its planned 110 million-pound offer.
Fat Face cited market conditions for pulling the listing, while analysts suggested private equity owner Bridgepoint was seeking too high a price.
Proceeds from London IPOs have more than trebled this year to $8.8 billion across 33 listings, according to Thomson Reuters data.
B&M's offer valuation gives the company a price-earnings multiple of 22-27.7 times, with analysts estimating the firm will make a net profit of 105 million pounds in the year ending March 2015, the sources said.
The company, which is chaired by former Tesco chief executive Terry Leahy, has said it had adjusted earnings before interest, tax, depreciation and amortisation of 130 million pounds in the year to 29 March 2014. Based in Liverpool, the company now operates over 370 stores across the UK but Chief Executive Simon Arora has said the aim is to now expand at a rate of around 40 new stores a year.
Shares in Poundland, the 500-store discount chain operator which floated two months ago, were trading at 352 pence a share on Friday, up from their debut price of 300 pence and at almost 26 times forecast earnings, according to Thomson Reuters data.
The B&M offer is being run by Goldman Sachs and Bank of America Merrill Lynch. Credit Suisse and Deutsche Bank are acting as joint bookrunners. Lazard is advising.
B&M declined to comment. ($1=0.5982 British pounds) (Editing by Greg Mahlich)