RIYADH – Alinma Tokio Marine traded as high as SR100, a tenfold increase from its initial public offer price of SR10. It was at SR76 after an hour of trading, with 5.5 million shares having changed hands in hectic trade. Many Saudi stocks more than double on listing, because IPO shares are traditionally sold at cheap valuations by international standards. The government encourages IPOs as a way of distributing corporate wealth to its citizens. Alinma Tokio Marine's jump was large even by Saudi standards, however. Even though the overall Saudi stock market has been hit by the global slump - the local index is down 15 percent from this year's peak - many investors remain cash-rich because of the booming Saudi economy and are eager for new investment opportunities, analysts said. "We will see the price supported for the first few days, and then there will be some selling pressure" as short-term investors take profits, said Tarek Al Mady, an independent financial analyst in Riyadh. Alinma Tokio Marine was seen as particularly attractive because, as an insurance stock, it is focused on Saudi Arabia's domestic economy rather than the shaky global economy. The company plans to develop Islamic insurance or takaful products for both retail and corporate customers; they will be sold through the national branch network of Alinma Bank, a co-founder of the firm. Islamic insurance has been expanding rapidly in the Gulf although growth has slowed in recent years. The growth of takaful contributions in Saudi Arabia, which accounts for about half of the global total, slowed to 12 percent in 2010, the most recent year for which data is available, from a compound annual growth rate of 38 percent during 2005-2009, a report by consultants Ernst & Young said in April. Alinma Tokio Marine's IPO of 6 million shares, or 30 percent of the company, raised SR60 million ($16 million) and was more than 16 times subscribed, according to Alinma Bank, which was lead underwriter. The company is owned 29 percent by the Japanese parent and 29 percent by Alinma. – Reuters
