* Shares priced at $21 in IPO, range had been $21-$23

* KKR sells 11.4 mln of the shares, to still own 89.5 pct

* Dollar General sells 22.7 mln shares, will pay down debt

NEW YORK, Nov 12 (Reuters) - Discount retailer Dollar General Corp (DG.N: Quote, Profile, Research) priced shares in its initial public offering at $21 each, at the low end of expectations.

Dollar General, which is almost entirely owned by private equity firm Kohlberg Kravis Roberts & Co [KKR.UL], had expected the shares to sell for between $21 and $23 each.

Dollar General and KKR sold a total of 34.1 million shares, yielding gross proceeds of $716.1 million in the IPO.

KKR, the only shareholder to offer stock in the IPO, is selling 11.4 million shares, after which it will still own 89.5 percent of the company, according to its most recent prospectus.

Dollar General, which is based in Goodlettsville, Tennessee, and operates about 8,577 stores in the United States, is offering 22.7 million shares in the IPO.

Assuming an IPO price of $22 per share, Dollar General had estimated that the IPO would yield net proceeds of $467.8 million. It will use all of its share of the money raised in the IPO to pay down debt.