* Co owned by Saudi conglomerate Olayan Group
* Hires Morgan Stanley as financial advisor - sources
* IPO may raise 300 mln-500 mln riyals - source
* IPO scheduled for Q1 2013 listing - source
By Dinesh Nair
DUBAI, April 23 Health Water Bottling Co Ltd, a company owned by Saudi Arabian conglomerate Olayan Group, is planning to go public by issuing 30 percent of its shares in a flotation in the first quarter of 2013, three sources said.
Health Water, which was formed in 1973 and is the sole distributor of Holsten non-alcoholic beer and Power Horse energy drink in the kingdom, is planning to raise between 300 million and 500 million Saudi riyals ($80 million-$133 million) from the public offering, said one of the sources.
Health Water, which also owns the "Nova" mineral water brand, has hired Morgan Stanley as financial advisor to manage the sale, the sources said, speaking on condition of anonymity as the matter is not public.
"It's a pretty good business which generated about $120-$130 million in net income last year. A float from the group is going to generate investor interest," the source said.
Health Water officials were not immediately available for comment.
Olayan Group is one of the largest family-owned firms in the kingdom and owns a sizeable stake in Swiss bank Credit Suisse . It has a multi-billion dollar portfolio of investments spread across major asset classes globally.
Traditionally, equity markets have been a popular source of funding for Saudi companies, given the nascent nature of bond markets and a slowdown in bank lending.
Unfavourable market conditions have limited the number of IPOs in Saudi Arabia in recent years but the trend seems to be reviving amid a 30-percent stock rally since late last year prompted by hopes of Tadawul opening up to foreign investors.
Sentiment was boosted last year by a 400 billion riyals ($106.66 billion) populist spending package unveiled by the king in a move to head off social unrest. This was seen as giving a boost to infrastructure and property companies in particular.
Turnover on the bourse has recently spiked to levels not seen since 2007 as Saudi retail investors shifted funds from other asset classes to equities, with small-cap stocks being targeted for the bulk of speculative trading.
Construction Products Holding Co (CPC), a manufacturer of building materials and a unit of Saudi Binladin Group, plans a 30 percent listing and has mandated the investment banking arms of Gulf International Bank and Samba Financial Group sources told Reuters in November.