* Mall operator trades below IPO price of 26 riyals/share
* IPO first after new rules to limit stock fluctuations
* Saudi Arabia’s main index up more than 10 pct this year (Updates share price, adds CEO quotes, adds TV)
By Marwa Rashad and Hadeel Al Sayegh
RIYADH/DUBAI, May 22 (Reuters) - Saudi Arabian mall operator Arabian Centres shares traded below their initial public offer price on Wednesday, underperforming the market and reflecting limited retail investor demand.
The Arabian Centres IPO was priced at the lower end of an indicative price band and coincided with a fall in global markets driven by fears over the wider economic impact of a growing trade dispute between the United States and China.
Arabian Centres was the kingdom’s third biggest IPO since Saudi Arabian lender National Commercial Bank raised $6 billion in 2014, according to Refintiv data.
Although Arabian Centres shares hit 26.10 Saudi riyals at their open, they were trading at 24.44 riyals by 0957 GMT, against an IPO price of 26 riyals. This valued the deal, which represents 22.7% of the company, at 2.8 billion riyals ($747 million), including a so-called greenshoe option.
Arabian Centres plans to expand its operations to 27 malls within four years and is building cinemas after a decades-long ban on movie theatres was lifted last year.
“We have a strong development plan for the future...We have more than 3 billion (Saudi riyal) investments to build in the other shopping centers which we are going to open in the next four years,” Oliver Nougarou, its chief executive, said.
Arabian Centres shares were priced at 26 riyals,
Arabian Centres said in a statement that 94% of the offering went to institutional investors and 6 percent to individuals. It had said it could sell 10% to retail investors.
Riyadh has been encouraging more family-owned companies to list in a bid to deepen its capital markets as part of reforms aimed at reducing its reliance on oil revenue.
“The fall today is not surprising given the tepid response to the offering and many institutional investors who might have been over allocated must be offloading their position today,” said Nishit Lakhotia, head of research at Bahrain-based SICO.
Other market analysts said the fall reflected the risk associated with the firm and wider negative sentiment on retail.
The company’s listing comes after new rules introduced by Saudi Arabia’s market watchdog, the Capital Markets Authority, which aim to limit stock fluctuations after a public share-sale.
Goldman Sachs was appointed as a stabilising agent for Arabian Centres, where a bank oversees a newly-listed stock in the early hours of trading.
The IPO of Arabian Centres, majority-owned by Fawaz Alhokair Group, is the first in the kingdom under Rule 144a, which allows the sale of securities primarily to qualified institutional buyers in the United States.
Saudi Arabia’s Public Investment Fund (PIF), the kingdom’s sovereign wealth fund, has indirectly invested in offering, sources told Reuters this month.
The Saudi stock market is up by more than 10 percent so far this year, one of the best performing in the Middle East, as it entered global emerging market benchmarks such as the FTSE Russell emerging market index. ($1 = 3.7500 riyals) (Additional reporting by Saeed Azhar; Editing by Alexandra Hudson and Alexander Smith)