Health Water, which was formed in 1973, is planning to raise between SR300 million and SR500 million ($80 million-$133 million) from the public offering, said one of the sources.

Health Water has hired Morgan Stanley as financial adviser to manage the sale, the sources said.

“It’s a pretty good business which generated about $120-$130 million in net income last year. A float from the group is going to generate investor interest,” the source said.

Health Water officials were not immediately available for comment.

Olayan Group owns a sizeable stake in Swiss bank Credit Suisse. It has a multi-billion dollar portfolio of investments spread across major asset classes globally.

Traditionally, equity markets have been a popular source of funding for Saudi companies, given the nascent nature of bond markets and a slowdown in bank lending.

Unfavorable market conditions have limited the number of IPOs in Saudi Arabia in recent years but the trend seems to be reviving amid a 30-percent stock rally since late last year prompted by hopes of Tadawul opening up to foreign investors.

Sentiment was boosted last year by a SR400 billion spending package. This was seen as giving a boost to infrastructure and property companies in particular.

Turnover on the bourse has recently spiked to levels not seen since 2007 as Saudi retail investors shifted funds from other asset classes to equities, with small-cap stocks being targeted for the bulk of speculative trading.

Construction Products Holding Co. (CPC), a manufacturer of building materials and a unit of Saudi Binladin Group, plans a 30 percent listing and has mandated the investment banking arms of Gulf International Bank and Samba Financial Group, sources said in November.

FROM: REUTERS