By Souhail Karam
New lender seeking to raise $2.8bn through offering, kingdom's largest IPO ever.
Saudi Arabia's Alinma Bank said on Tuesday its 10.5 billion riyal ($2.8 billion) initial public offering (IPO), the kingdom's largest ever, raised about 2 billion riyals on the first subscription day.
"The number of subscribers for the [Monday] reached 1,063,000 and the total value of the purchased shares reached around 1,998 million riyals," Alinma said in a statement sent to newswire Reuters.
Alinma Bank is seeking to sell 1.05 billion shares at 10 riyals each in the April 7-16 IPO. The sale represents 70% of the new bank's capital.
The sale is open only to Saudi nationals who will have to buy at least 50 shares each, according to the listing prospectus.
More than 90% of subscribers used phone banking, internet and ATMs to buy the 199.8 million shares, it said.
The Public Investment Fund and two state pension funds - the General Organisation for Social Insurance (GOSI) and the Public Pension Agency - will equally share the remaining 30% of Alinma's 15 billion riyals capital.
GOSI and the Public Investment Fund were appointed underwriters of the sale.
Alinma's IPO, 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. Saudi Telecom also sold shares to government funds, taking the total raised to $4.08 billion.
The government announced plans to set up Alinma in 2006 during a stock market crash which had wiped off more than half of the capitalisation of the largest Arab bourse.
That announcement prompted many existing lenders, such as National Commercial Bank and Samba Financial Group, to increase their capital.
Alinma Bank, which has yet to start business, will provide financial services that are compliant with Islamic law and will also arrange project financing.
It is to begin operations in the second half of 2008 with 15 branches across the country of about 25 million people. (Reuters)