Bahrain sovereign fund to sell stake in smelter

DUBAI, United Arab Emirates (AP) -- Bahrain's sovereign wealth fund is looking to raise more than $500 million by selling off a stake in the Gulf nation's aluminum smelter, one of the kingdom's industrial engines.

The initial public offering announced Sunday by Bahrain Mumtalakat Holding Co. is the fund's first major sale since it was set up four years ago to manage the island country's state-owned businesses.

Bahrain, which hosts the U.S. Navy's 5th Fleet, has far less oil and gas reserves than its Gulf Arab neighbors. It is working to create jobs and diversify its economy away from dwindling oil revenues by attracting foreign investment.

"Mumtalakat was set up to help grow the wealth of Bahrain and drive value creation in the strategic non-oil and gas related assets of Bahrain, and this process supports those aims," said Mumtalakat Chief Executive Talal al-Zain.

Mumtalakat is offering as many as 163.3 million shares in Aluminium Bahrain, which goes by Alba. That represents an 11.5 percent stake.

It's offering the shares for 0.9 dinars to 1.25 dinars ($2.39 to $3.32) apiece. The final offering price will be announced Nov. 8.

Shares will be listed both in Bahrain and on the London Stock Exchange.

Many Persian Gulf sovereign wealth funds invest heavily overseas. But Mumtalakat focuses primarily on Bahraini state-run companies, including money-losing national carrier Gulf Air and Bahrain International Circuit Co., the firm that operates the country's Formula 1 race track.

Al-Zain has said part of the fund's mandate is to consolidate the government's holdings in one place with the aim of at least partially privatizing them down the road.

Alba's smelter ranks among the world's largest, with an average annual production of 860,000 tons. It is one of the island nation's main industrial facilities outside the energy sector.

Mumtalakat owns 77 percent of Alba. Saudi Basic Industries Corp. also owns a stake.

Companies in the Gulf are slowly starting to test the waters for IPOs after a drought brought on by the global economic crisis.

Dubai-based phone retailer Axiom Telecom last week said it is planning to sell up to 35 percent of itself with a listing on the Nasdaq Dubai.

The emirate's state-run port operator DP World has said it intends to seek a secondary listing on the London Stock Exchange, though those plans are on hold until at least early next year.