MOSCOW (Reuters) - Russian diamond miner Alrosa <ALRS.MM> said on Monday it would raise 41.3 billion roubles ($1.3 billion) in an initial public offering after it priced the 16 percent stake on offer at the lower end of a previously announced range.

The offer price of 35 roubles per share puts the company's market capitalisation at 258 billion roubles. Alrosa had said it would price the offering at between 35 roubles and 38 roubles a share.

The Russian government is selling a 14 percent stake in Alrosa, which competes with Anglo American-owned <AAL.L> De Beers for the ranking of the world's largest diamond miner.

The company is selling an additional 2 percent stake of treasury shares in the IPO, which would lift to 23 percent the publicly listed stake in the company.

The book for the sale of the stake on the Moscow Exchange was closed on October 25, after a two-week marketing process.

(Reporting by Polina Devitt and Olga Popova; Writing by Lidia Kelly; Editing by Paul Simao and Miral Fahmy)