July 4 (Bloomberg) -- Saudi Prince Alwaleed bin Talal's Kingdom Holding Co. is preparing to sell shares in an initial public offering that values the company at 64.6 billion Saudi riyals ($17.2 billion), a company official said.

Kingdom will sell shares amounting to 5 percent of the company, half to Saudi individuals and half to institutions, for 10.25 riyals each, P.J. Shoucair, executive director for international investments, said in an interview from Riyadh.

``The company is performing well and it's now time to take it to the next stage,'' Shoucair said. ``We can expand further.'' Shares in Kingdom, set to become the country's fifth-largest publicly traded company, will go on sale to individuals July 10.

Alwaleed, ranked by Forbes magazine as the world's 13th richest person, is putting part of his company up for sale as fellow billionaires Henry Kravis and George Roberts plan a $1.25 billion IPO for their New York-based buyout firm, Kohlberg Kravis Roberts & Co. Like Berkshire Hathaway Inc. Chairman Warren Buffett, the second-wealthiest man in the U.S. after Microsoft Corp. founder Bill Gates, Alwaleed built his $25 billion fortune by investing in undervalued brand-name companies.

``I have no doubt that the response will be pretty good on the IPO,'' said Faisal Hasan, head of research at Global Investment House KSCC, Kuwait's biggest investment bank. ``It should get a strong public response because of the background of the company.''

Saudi institutional investors have already sought more than twice the shares they were offered, said two people with knowledge of the matter who declined to be identified.

Smaller Stake

Kingdom's equity assets include a 4 percent stake in Citigroup Inc., 22 percent of Four Seasons Hotels Inc., 3.75 percent of News Corp. and 17.3 percent of Euro Disney SCA, according to its Web site. It owns all of the George V Hotel in Paris and entertainment company Rotana Holding.

Kingdom has no plans to offer more than 5 percent of its shares to investors, Shoucair said. The company's adviser, Samba Financial Group, recommended to Alwaleed that 5 percent would ``provide sufficient liquidity for the shares to trade in the aftermarket,'' he said.

Alwaleed said in February 2006 that he planned to sell at least 30 percent of Kingdom to benefit from a public company's ``better access'' to debt and equity markets. Saudi Arabia's Tadawul All Share index tumbled by 47 percent in the year to June 30, making it the worst performer of all equity benchmarks tracked by Bloomberg.

``The IPO market is less welcoming than it was,'' said Giyas Gokkent, head of research for National Bank of Abu Dhabi PJSC.

Citigroup

The 52-year-old prince will own 93.5 percent of Kingdom after the sale, according to an offer prospectus seen by Bloomberg. Kingdom's shares are expected to list on the Saudi stock exchange by the end of July, Shoucair said.

Alwaleed, a nephew of Saudi King Abdullah, began investing after graduating from California's Menlo College in 1979. A year later, he received a $300,000 loan from Saudi American Bank, which was run by Citicorp, according to his authorized biography ``Alwaleed: Businessman, Billionaire, Prince,'' written by Al Jazeera International host Riz Khan.

In 1991, he invested $590 million in Citigroup predecessor Citicorp, which needed cash as it struggled with Latin American loan losses and a collapse in U.S. property prices. Alwaleed, who at the time already owned $207 million of the stock, now holds more than $10 billion of Citigroup shares.

`Minimal' Demand?

Some Saudis may shun Alwaleed's shares because Kingdom's holdings in Citigroup and Four Seasons aren't in compliance with a ban on interest payments and alcohol under Muslim Shariah law, said Zeyad Awad, head of research for Riyad Bank.

``It will not be Shariah-compliant so demand from the retail public will be minimal,'' Awad said. ``The demand will probably come from the very high net-worth individuals and potentially conventional mutual funds.''

Kingdom has said its average return on investments over the last 16 years is 20 percent, outperforming the Morgan Stanley Capital International and Standard & Poor's global indexes.

To contact the reporter on this story: Will McSheehy in Dubai, U.A.E. at wmcsheehy@bloomberg.netGlen Carey in Dubai gcarey8@bloomberg.net

Last Updated: July 4, 2007 11:32 EDT