* Bourse exec, local investors more cautious
* Qtel unit to sell 25 pct of shares in public sale
* Will be largest ever listing on Iraq bourse
* Rival operators Zain Iraq, Korek also required to list
By Aseel Kami and Patrick Markey
BAGHDAD, Jan 23 Iraqi mobile operator Asiacell's $1.35 billion share sale will be fully subscribed, bookrunner Rabee Securities said, though a top bourse official and some local investors were more cautious about the country's largest ever stock listing.
As the first major flotation since a U.S.-led invasion toppled Saddam Hussein in 2003, Asiacell's share offer is seen as a test of confidence in the OPEC member's economy, which is recovering from years of war and economic sanctions.
The country's No.2 telecommunications operator, 53.9 percent owned by Qatar Telecom (Qtel), is due to list on the Iraq Securities Exchange (ISX) on Feb. 3 following a month-long book-building process.
It aims to sell 67.5 billion shares for at least 22 Iraqi dinars ($0.02) per share in the offering, which began on Jan. 3.
"I knew there would be interest, I just didn't know how much - I can say that we will easily cover it," Shwan Ibrahim Taha, chairman of sole book runner Rabee Securities, told Reuters. "We will be fully subscribed."
He said demand came from both foreign and local investors.
"We are opening up a lot of accounts and we are not refusing anyone," said Taha. "Very roughly, it is half Iraqi and half international."
Asiacell and domestic rivals Zain Iraq, a subsidiary of Kuwait's Zain, and France Telecom affiliate Korek are obliged to sell a quarter of their shares to the public and list locally as part of their $1.25 billion licences issued in 2007.
Asiacell will be the first to do so, with all three missing an August 2011 deadline, and together these listings could nearly double the bourse's current market capitalisation of about $4.7 billion.
The main equity index, which fell around 8 percent in 2012, has about 85 listed firms. Banking dominates in terms of market value, although there are also stocks in industrial, insurance, hospitality and agriculture sectors.
Average daily turnover is just $4.9 million, according to the Federation of Euro-Asian Stock Exchanges, which may deter potential investors in Asiacell's offering.
"I am optimistic that 50 percent of the shares offered will be covered," said Layth Sulaiman, chairman of the ISX board of governors, warning the offering represented a huge amount of shares to be sold in the space of a month.
A recent statement on the ISX website said buy orders must total at least 75 percent of shares offered, with the exchange to announce the size of the order book on Jan. 31. If orders are below this benchmark, the sale will be cancelled and the process will start again, Sulaiman added.
Qtel is expected to account for much of the demand, with the former monopoly likely using the share sale to raise its stake in Asiacell to at least 60 percent, as previously agreed in a $1.5 billion deal in June that upped its holding from 30 percent.
Some investors on the Baghdad trading floor said the price was too high and were reluctant to risk their money while Iraq's political, economic and security situation remained fragile.
"This is a big gamble," said local investor Shamil al-Moussawi, standing below the electronic board at the ISX.
The share sale is technically not an initial public offering (IPO), with Asiacell having earlier completed a nominal IPO so that it could convert to a joint stock company as required under Iraqi law to be able to list on the local bourse.
As a secondary offering, some shareholders are offloading their shares - Farouk Group Holding is thought to be main seller - and will receive the sale proceeds, rather than Asiacell. (Reporting by Aseel Kami and Patrick Markey in Baghdad, additional reporting and writing by Matt Smith in Dubai; Editing by Mark Potter)