Saudi Arabia's market regulator has granted permission for a family-owned hotel and leisure group to launch a share sale this month in a move that will help diversify Riyadh's bourse.

Abdul Mohsen Al Hokair Group for Tourism and Development can sell 30 per cent of its shares in an initial public offering (IPO), a stock exchange statement said yesterday.

Petrochemicals and banking dominate Riyadh's bourse and these two sectors account for 13 of the 20 largest listed stocks. That has led Saudi authorities to encourage family-owned groups and businesses in other industries to go public.

Abdul Mohsen Al Hokair's IPO will be divided into two sections and conducted as a book-build offering, meaning the price of the shares will be dictated by demand from investors instead of fixed at the start of the process.

The first section will be for mutual funds and "authorised persons", after which the price of shares will be set. A second period for retail investors to subscribe to shares will run from May 28 to June 3.

Abdul Mohsen Al Hokair, whose hotel operations include Hilton and Holiday Inn hotels in the Middle East, appointed Saudi Fransi Capital, the investment banking arm of Banque Saudi Fransi to arrange the IPO, sources said.-Reuters