DUBAI- Saudi Arabia's Nahdi Medical Co, the largest pharmacy retail chain in the kingdom, is weighing an initial public offering (IPO) and has begun early talks with potential advisors, two sources familiar with the talks told Reuters.

Nahdi, founded by Abdullah Amer Al Nahdi in 1986 and is the Saudi equivalent of British health retailer Boots, has a network of more than 1,100 pharmacies. It is 50% owned by Jeddah-based Islamic investment firm Sedco Capital, according to information on its website.

The company is in early talks with advisors for its public share sale, which could happen next year, said the sources, declining to be named as the matter is not public.

The company's value is more than 10 billion riyals ($2.67 billion) in equity, said two separate sources.

Nahdi declined to comment, while a Sedco spokesman said he was unaware of an IPO plan.

Healthcare is one of the main focus areas of the Saudi Vision 2030, a package of economic and social policies designed to reduce the kingdom's dependence on oil exports.

The Gulf region is set to double its pharmaceutical drug market to $20 billion by 2025, according to Kuick Research.

Saudi Arabia is encouraging more family-owned companies to list in a bid to deepen its capital markets under a reform push aimed at cutting the kingdom’s reliance on oil.

As further encouragement, the regulator has relaxed the traditional IPO requirement to list at least 30% of a company.

The kingdom has had two public share sales this year. Dr Suleiman Al Habib in February offered 15% of its shares for about $700 million, while Amlak International is looking to raise 435 million riyals ahead of a listing on the Tadawul exchange.

The market regulator approved at the end of June an application from BinDawood Holding Company to offer 20% of the company and list.($1 = 3.7518 riyals)

(Reporting by Hadeel Al Sayegh, editing by Louise Heavens and Emelia Sithole-Matarise) ((Hadeel.AlSayegh@thomsonreuters.com; +971566883310;))