Prince Alwaleed bin Talal starts selling shares in his Kingdom Holding in a cautious bet on the recovery of the Saudi bourse

Kingdom is selling 315 million existing shares, or a 5 per cent stake, to Saudi nationals at 10.25 riyals ($2.73) each, valuing the company at $17.2 billion.

The IPO will run until July 18 with half the shares allocated to institutional investors, lead manager Samba Financial Group said.

Prince Alwaleed's stake in Kingdom, which had $24 billion in assets at the end of 2006, will fall to 93.5 per cent after the sale. His son and daughter are also shareholders in Kingdom.

Prince Alwaleed has made billions of dollars investing in underperforming companies and is the world's 13th-richest person, according to Forbes magazine.

He is taking his company public after a stock market crash halved the value of the Saudi bourse last year and diminished the appetite for initial public offerings in the world's biggest oil-exporting region.

The Saudi index dropped 52.53 per cent last year and is off 8.8 per cent so far in 2007, making it the worst performer among 13 Arab benchmarks tracked by Reuters.

Four of the 13 markets fell more than 35 per cent last year, making more companies reluctant to sell shares to the public and investors more cautious about buying them.

'As long-term investors, we are not concerned by short-term market fluctuations. We have enormous confidence in the Saudi economy, and in the long-term sustainable development of the Saudi capital market,' P J Shoucair, Kingdom's executive director of international investment, told Reuters.

The amount of money companies are looking to raise in the region in IPOs through 2010 has fallen by about half, Abu Dhabi-based private equity firm Gulf Capital said last week.

The average oversubscription rate for offerings in the Gulf was just 6.5 times in the first six months of this year compared with 60 times in the year-earlier period, Gulf Capital said.

Kingdom's IPO prices its shares at around 67 times 2006 earnings, more than five times the average for the Saudi bourse, on which it will be the fifth-largest stock.

While the company is selling relatively few shares as most Saudi IPOs offer stakes of between 20 per cent and 30 per cent, Kingdom has not set a limit on the maximum number any one investor can buy, a first for a Saudi IPO.

The price is also just above the 10-riyal nominal value of the shares - the minimum for any Saudi IPO. No stock on the Saudi index has dropped below 10 riyals in the last 52 weeks.

Kingdom Holding's investments include shares of Time Warner, Apple Computer, Motorola and News Corporation as well as Savola Group.Reuters