Bahrain’s sovereign wealth fund Mumtalakat plans to raise as much as BD204 million ($540 million) in the just-commenced initial public offering (IPO) of Aluminum Bahrain (Alba), as it diversifies away from local investments.

The retail portion of the offering has been priced at BD1.250 per share, while the price range for institutional investors is 900 fils to BD1.250. There are 1,000 fils to the dinar.

Mumtalakat plans to sell up to 163 million ordinary shares in the company, which operates an aluminium smelter in Bahrain, or up to 11.47 per cent of its holding.

The sovereign fund, which bundles Bahrain’s non-oil state-owned companies, is one of the smaller funds in the world’s top oil-exporting region, with $9.1 billion in assets at the end of 2009.

It plans to sell some of its local private equity holdings to diversify into more liquid and international assets.

“All proceeds will go to new investments,” Mumtalakat’s chief executive Talal Al Zain said.

The retail offering period for the IPO started on October 24 and will end on November 4, with trading expected to start on December 5. The retail tranche of the IPO of 25 per cent will be underwritten by National Bank of Bahrain, Bahrain Islamic Bank, Al Salam Bank and Gulf International Bank (GIB).

The shares will be listed on the Bahrain Stock Exchange, while global depositary receipts (GDR) will be listed in London. Bookrunner and lead manager for the GDR listing are JP Morgan and GIB.

Mumtalakat owns a 77 per cent stake in Alba, with Saudi chemicals giant Sabic owning the rest.

EDB road show
Alba added weight to Bahrain’s Economic Development Board (EDB)’s road show in Paris to promote the kingdom as a business-friendly designation for international investors.

Present as part of the EDB delegation at the road show towards the end of September was Alba chief executive Laurent Schmitt. The team comprised high-powered industry leaders from Bahrain’s industrial, financial, service, telecommunications and manufacturing sectors.

Individual presentations were made by delegation members on their business operations that highlighted the strong business ties between Bahrain and France.

The aluminium sector currently represents 3 per cent of Bahrain’s GDP and includes a highly developed downstream sector comprising six major companies and over 500 medium and small enterprises.

Alba produces 850,000 tonnes annually of aluminium T-ingots, extrusion billets, rolling slab, propertzi ingots and molten aluminium.

Its output is estimated to be 2 per cent of total world aluminium production and 35 per cent of Middle East production.