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Saudi Kayan, which is 35 percent owned by state-controlled Saudi Basic Industries Corp. 2010.SE (SABIC), won approval earlier this month to offer 675 million shares at 10 riyals ($2.67) between April 28 and May 7.
The IPO, equivalent to 45 percent of the company’s share capital, is only open to Saudi Arabia’s 17.5 million nationals.
“We expect demand to be high,” said Ioannis Karapatkis, Managing Director Global Investment Banking Advisory as HSBC Saudi Arabia. “Anything is possible in Saudi Arabia, though I’m not sure it will reach the 10 million subscribers of King Abdullah Economic City.”
He said SABB 1060.SE -- 40 percent owned by HSBC Holdings Plc HSBA.L is underwriting 2 billion of the 6.75 billion IPO.
Saudi Arabia’s stock market plunged 52.5 percent last year, making it the worst performer among 81 measured by U.S. stock market research company Birinyi Associates.
The benchmark .SASI of the world’s largest oil exporter, which doubled in 2004 and 2005 as soaring oil prices spurred economic growth, has fallen another 8.32 percent this year to Wednesday.
The minimum subscription is for 50 shares and the maximum 20 million shares, the CMA said. The IPO was initially slated for last year.
“I don’t think (the IPO) will affect the market because everybody will get the minimum. It’s not worth it to sell shares to buy into Kayan,” said Hesham Abou-Jamee, head of asset management at Bakheet Financial Advisors.
SABIC is helping set up the $10 billion Saudi Kayan project with Kayan Petrochemical Co. to produce base chemicals, mainly for export to Asian nations such as China and India where growing economies are spurring demand.
The complex, which will produce ethylene, propylene and other chemicals, will be complete in 2009.
The biggest Gulf Arab IPO was in 2003 when the Saudi government sold a stake in Saudi Telecom Co. 7010.SE for $2.72 billion.
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