Saudi Arabia's Kingdom Holding will sell 5 per cent of its shares to Saudi nationals next week in an initial public offering that values billionaire investor Prince Alwaleed bin Talal's company at $17.2 billion.

Kingdom Holding, which had $24 billion in assets at the end of 2006, will offer 315 million existing shares at 10.25 riyals ($2.73) each, the Capital Markets Authority (CMA) said.

The IPO to raise 3.23 billion riyals will run from July 10 to 18 with half the shares allocated to institutional investors, lead manager Samba Financial Group said in a statement.

The share price, lower than the initial range of 10.50-11 riyals given to Reuters by sources familiar with the matter last month, would make Kingdom the fifth-biggest company by market value on the Saudi bourse, the largest in the Arab world.

Kingdom Holding also said profit fell 30 per cent to 967.6 million riyals in 2006, giving the company a trailing price-to-earnings ratio of 67, more than five times the average for the Saudi bourse.

'The high PE explains the 10.25 riyals price,' said Mohamed Al Omran, head of the Gulf Centre for Financial Consultancy.

The market for IPOs in the world's biggest oil exporting region has foundered after GCC stock markets crashed last year.

The pipeline of Gulf IPOs through 2010 has fallen by half in the past nine months as more companies opt not to list, Abu Dhabi-based private equity firm Gulf Capital said.

The Saudi stock market benchmark was the region's worst performer last year, falling 52.53 percent. It is down a further 11.9 percent this year.

Alwaleed  who has made billions of dollars investing in underperforming companies, said he was confident about the future of the Saudi market.

'Kingdom Holding has chosen to list on its home market given the underlying strength in the Saudi economy and its belief that the Tadawul (the stock market) will grow and strengthen as it matures,' he said in a statement.

Prince Alwaleed, who holds around 95 per cent of Kingdom's shares, is the world's 13th-richest person, according to Forbes magazine. He is Citigroup's largest individual shareholder.

Kingdom Holding's investments include shares of Time Warner, Apple Computer, Motorola and News Corporation as well as Savola Group, the Gulf's largest food company by market value, and sole owner of Arab entertainment group Rotana.

Kingdom said last month it had made an average return on investments of 20 per cent over the last 16 years, outperforming both the MSCI and the Standard & Poor's global indices by more than 10 per cent.

Asked to explain the decline in profit last year, P J Shoucair, executive director for international investments at Kingdom Holding said: 'The difference is due to the fact that (the company) did not sell any significant assets in 2006.'