UPDATE 1-Qatar's first IPO since 2010 fully subscribed

Wed Jan 22, 2014 8:23am EST

* Mesaieed Petrochemical offer raises $880 million

* Demand said to be strong

* Open only to locals; foreigners can buy in secondary market

* Start of a series of IPOs envisaged by government

* Offer completed ahead of MSCI upgrade of Qatar (Adds context, analysis)

By Amena Bakr

DOHA, Jan 22 (Reuters) - Mesaieed Petrochemical Holding Co, a unit of state-owned Qatar Petroleum, raised 3.2 billion riyals ($880 million) in the Qatari stock market's first initial public offer (IPO) of shares since 2010, the parent firm said on Wednesday.

All 323.19 million shares offered, amounting to 25.725 percent of Mesaieed [IPO-MPHO.QA>], were sold and demand was strong, Qatar Petroleum said, adding that the stock would start trading on the market next month.

The three-week offer, which ended on Tuesday, was open only to Qatari nationals. Qatar Petroleum did not give details of who bought the shares, saying that would be announced by Jan. 30.

The global financial crisis froze IPOs in Qatar but the government wants to revive them as a way to develop the tiny country, which is the world's top exporter of liquefied natural gas, into a regional financial hub. It also aims to use IPOs to spread more energy wealth among its citizens.

Qatar plans to conduct IPOs worth 50 billion riyals in its stock market over the next 10 years, the industry minister said last month. The country has a population of about 2.1 million, roughly 250,000 of whom are local citizens.

Mesaieed holds stakes in ventures that manufacture polyethylene, caustic soda and other chemical products. Its partners in the ventures include the U.S. company Chevron Phillips Chemical Co.

The stakes held by Mesaieed generated combined revenue of 4.3 billion riyals and net profit of 1.6 billion riyals in 2012, officials said.

Qatar's stock market, with a capitalisation of about $150 billion, is preparing for a new influx of foreign money in May, when international equity index compiler MSCI has said it will upgrade Qatar to emerging market from frontier market status.

New stock listings would help the market absorb the funds. The finance minister has said foreigners will be allowed to buy a total of up to 15 percent of Mesaieed in the secondary market.

Authorities took care to make the IPO financially attractive - Qatari citizens will be entitled to allocations of additional free shares in coming years if they keep the bulk of the Mesaieed shares that they buy in the IPO.

The government also said before the offer that it would buy 750 of the company's shares as a gift for each disadvantaged Qatari citizen - those receiving social insurance payments and people with special needs. (Writing by Andrew Torchia; Editing by Greg Mahlich and Mark Potter)