Saudi Arabia opens its largest-ever initial public offering (IPO) this week, hoping the presence of government funds among its founders and project financing plans will spur public interest.

The Inma Bank plans to raise SR10.5 billion ($2.8 billion) from April 7 to 16 in the sale of 1.05 billion shares representing a 70 per cent stake of the firm.

The Public Investment Fund, General Organisation for Social Insurance (Gosi) and the Public Pension Agency will each hold a 10 percent share of the bank's SR15 billion capital.

The IPO, which was delayed several times last year, could surpass the $2.72 billion Saudi Telecom Company raised in its public share sale in 2003 as the kingdom's largest.

'The presence of these funds will definitely be one of the things that encourages people (to take part in the IPO),' Mansour Al Maiman, head of Inma's founders' committee and the Public Investment Fund, told a news conference on Saturday.

'The Fund will also lead investment in other sectors in addition to Islamic banking, such as housing, information technology and others that need to expand.'

He said the bank hoped to take part in financing of major projects in the world's biggest oil exporter, which is trying to plough record revenue from high world energy prices into diversifying the economy, creating jobs and spreading wealth.

'There will be a big chance to finance most projects. The most important thing is new ideas and new bases for financing. The bank has begun with a strategy in this regard,' Maiman said.

The government is seeking private sector help to set up six 'economic cities' - industrial and tourist zones spread around the vast kingdom - including a financial centre in Riyadh.

Inma will begin operations in the second half of 2008 with 15 branches across the country of about 25 million people.

The 10 listed Saudi banks are trying to develop their lending business in the aftermath of a stock market crash in 2006. The crash set back government plans to encourage ordinary Saudis into shareownership as a means of spreading oil wealth.

'The Ministry of Social Affairs and other bodies are
striving to have IPOs so that all Saudi citizens can take part. The mechanisms of this IPO is framed for small investors,' Abdel-Mohsen al-Faris, Inma's executive chief said.

The IPO, lead managed by Samba Capital, a subsidiary of Samba Financial, will be open only to Saudi nationals.-Reuters