"To strengthen PPI's platform and deleverage PPI, SBB and PPI are discussing a transfer of parts of SBB's Norwegian property portfolio and SBB's Norwegian organisation to PPI in connection with the IPO," the Swedish company said.

SBB has been scrambling to salvage its finances after it racked up vast debt by buying public property, including social housing, government offices, schools and hospitals.

The company's problems are unfolding as Sweden struggles to contain a wider property crisis, triggered by high debts, rising interest rates and a wilting economy.

But SBB said on Friday it does not intend to decrease its current ownership in PPI.

SBB said 92% of PPI's rental income comes from the Norwegian state or municipalities with the associate owning properties worth around 9 billion Norwegian crowns ($862.80 million).

Arctic Securities, DNB Markets, Danske Bank and Nordea would act as advisory banks, while law firm Thommessen would serve as a legal advisor, SBB added.

($1 = 10.4311 Norwegian crowns)

(Reporting by Essi Lehto, editing by Terje Solsvik)