RIYADH: Saudi Ground Services Co, a unit of national carrier Saudi Arabian Airlines, has set the price for its 30 percent initial share sale at SR50 per share, a statement from the company’s financial adviser said.

The price, set following a book-building process with institutional investors, means the company will raise SR2.8 billion ($752 million) from the offer.

The public offer, first announced in 2012, is part of a move to privatise the Saudi airline.

A subscription period for retail investors will run from June 3 to 9, with 22.56 million shares allocated to them out of a total 56.4 million shares, according to the statement from HSBC’s Saudi Arabian unit.

The bank added that institutional investors had pledged orders nine times higher than the full amount of shares offered during the book building.

Ninety percent of shares allocated to institutions will go to investment funds, and final allocations will be announced after retail subscriptions are complete, the statement said.

Saudi Arabia’s Capital Market Authority has said it will raise the proportion of shares allocated to institutional investors in initial public offers as it aims to reduce volatility in the market.

The Kingdom’s stock market, set to open to qualified financial institutions on June 15, is dominated by retail investors in terms of daily trading volumes.

“Markets with a big tranche of institutional investors are characterised by low volatility and high efficiency,” the Capital Market Authority said in a earlier statement.

“Increasing institutional investors’ strategic ownership in listed companies supports governance practices and increases transparency, a target that is hard to achieve amid the dominance of retail investors in the market.”

In recent IPOs, the latest of which was Saudi Company for Tools and Hardware, the CMA allocated 60 percent of shares to institutional investors and 40 percent to retail investors.

The CMA said it aimed to encourage retail investors to participate in IPOs through specialized channels that were run by professionals with greater understanding of risks.

Some traders have criticized funds which profit by selling retail investors shares that they obtain at lower prices in the primary market. But the CMA said it would not restrict funds from selling their allocated IPO shares if they wished.

“Restricting fund managers’ ability to sell is not in line with international practices in this regard,” it said.