Saudi Steel Pipes Co will seek to raise 400 million riyals ($106.7 million) in an initial public offering of a 31.4 percent stake this week to help finance expansion plans, the company said.

The firm will offer 16 million new shares to local investors at 25 riyals each, it said in a statement.

The share price, fixed after a book-building process, values the company at 1.275 billion riyals.

Local banks will take subscription requests from June 27 until July 3.

The firm, which earmarked 700,000 shares for its 447 employees, has said it would use the IPO proceeds to help finance two expansion projects worth 646 million riyals in partnership with other investors.

The biggest of the two plans consist of building a new export-oriented pipe manufacturing plant, which will cost 485 million riyals and will open by 2012, it said.

The plant will be able to produce 200,000 tonnes of products per year, the firm said without indicating its equity share in the project.

The second project consists of building a pipe coating plant at an estimated cost of 161 million riyals. The firm will hold a 50 percent stake in the plant.

Saudi Steel Pipes, founded in 1980, caters mainly to state oil firm Saudi Aramco. - Reuters