Nov 8 (Reuters) - Avon Products Inc (AVP.N) said it will sell its 74.67 percent stake in its Avon Japan business to an affiliate of TPG Capital [TPG.UL] for 7.3 billion yen ($89.82 million), to focus on other markets with higher growth potential.

Avon make-up

The world's largest direct seller of cosmetics would need to commit significant additional investment in the unit in order to generate profitable growth in the near to intermediate term, it said.

Avon Japan (4915.OS), the only unit in Avon's geographic portfolio that is publicly traded, contributes less than 2 percent of its total company sales and the sale is expected to have no material impact on its financial statements.

As part of the transaction, private equity firm TPG Capital is launching a tender offer in Japan for all outstanding shares of Avon Japan at 74 yen per share, the same price that Avon has agreed to for its shares.

Avon's stake sale is not conditional upon TPG Capital's acquisition of the 25.33 percent minority stake, it said.

The transaction, due to close in the fourth quarter, is expected to have no material impact on Avon's financial statements.

Effective with fourth quarter 2010 reporting, Avon Japan will be accounted for as a discontinued operation, the company said.

(Reporting by S. John Tilak in Bangalore; editing by Louise Heavens) ($1=81.27 Yen)