* Says govt offering incentives to develop bourse * Algeria exchange lags neighbouring countries
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By Hamid Ould Ahmed
ALGIERS, Aug 31 (Reuters) - An Algerian insurance company will later this year become the first private firm to list on the Algiers stock exchange, encouraged by government reforms, the firm's chief executive said.
Algeria's stock exchange lags far behind the bourses in neighbouring Morocco and Tunisia. It has very low liquidity, has only seven quoted companies and the last time any firm floated equity on the exchange was ten years ago.
Oil and gas exporter Algeria has Africa's fourth-biggest economy but its stock exchange has been held back by restrictions on financial transactions and a business environment that is dominated by the state.
Hassen Khelifati, chief executive of Alliance Assurance, said told Reuters in an interview that at least four other companies planned to list on the Algiers exchange between now and 2011, though he did not name them.
"The financial market in Algeria is under construction," he said.
"But I think with the will of the authorities and financial players, we can boost this market to make it fully participate in the development of the country."
He said his company would seek to raise 1.4 billion Algerian dinars ($18.59 million) in October by issuing 1.8 million shares with a price of 830 dinars per share.
The company -- which he said was also planning to sell a 30 percent stake to a European firm in a separate deal -- will use the cash raised from the listing to increase its capital and carry out investments, Khelifati said.
STATE DOMINATION
The value of all transactions on the bourse last year was $6.74 million, according to the exchange's figures.
Khelifati said he had received assurances from Algerian officials that a programme of reform was underway to encourage the development of the exchange.
He said part of the strategy was a new law which will provide an exemption from tax for all capital gains on stock-market operations for a five-year period.
An opening up of the stock exchange would go against the trend in Algeria, where investors and analysts say the government has been creating new obstacles for some private businesses and especially foreigners.
On his firm's partnership with a foreign investor, Khelifati declined to name the company but said the deal to sell a 30 percent stake had been sealed and was now awaiting approval by the Algerian state regulator. ($1=75.30 Algerian Dinar) (Editing by Erica Billingham)