Lulu IPO: UAE retailer to list 25% shares on ADX

The biggest pan-Gulf hypermarkets operator expects its shares to start trading on the Abu Dhabi bourse on November 14

Shoppers at Lulu Hypermarket in Abu Dhabi. Khushnum Bhandari / The National

The UAE retail giant Lulu Group plans to list 25 per cent of its share capital on the Abu Dhabi bourse, the latest company seeking to capitalise on the continued economic momentum and listing boom in the Emirates.

The hypermarkets chain operator plans to float 2,582,226,338 shares with a nominal value of Dh0.051 ($0.014) a share through an initial public offering on the main bourse of the Abu Dhabi Securities Exchange, it said on Monday.

All shares offered through the public float are being sold by the company’s sole shareholder, Lulu International Holdings.

UAE retail investors, including employees of the group, as well as institutional investors and eligible senior executives of the company will be able to subscribe to the offering.

The subscription period for the public float will open on October 28 and will end on November 5 for retail, institutional and senior executive tranches. The final offer price will be determined through a book building process and the Lulu Group expects its shares to begin trading on the ADX “on or around” November 14.

Lulu is a brand “synonymous with retail in the GCC and we’re incredibly proud to launch our IPO today”, Saifee Rupawala, chief executive of Lulu Retail, said. “Over the past 50 years, we have grown from one store in Abu Dhabi to the largest pan-GCC retailer by market share and the fastest-growing player of scale in the kingdom of Saudi Arabia.”

The company’s current scale reflects its track record of delivering robust revenue growth, attractive profit margins and a well-defined growth strategy, Mr Rupawala said.

“With GCC retail presenting a $100 billion market opportunity over the next five years and our business in Saudi Arabia primed for further growth, we are confident that Lulu will continue to be where the world comes to shop,” he added.

LuLu, one of the largest supermarket chains in the Gulf, founded by Indian-born businessman Yusuff Ali in 1974, operates more than 240 hypermarkets and shopping malls in 10 countries including India, Egypt, Malaysia and Indonesia.

Listing boom

LuLu is the latest company seeking to sell shares to the public amid a listing boom driven by robust investor demand for new issues. The continued economic momentum in the UAE, the Arab world's second-largest economy, has also boosted listings across sectors on both Abu Dhabi bourse and the Dubai Financial Market.

Lulu’s intention to float follows the listing of ADNH Catering, a unit of Abu Dhabi National Hotels, which raised Dh864 million through the sale of a 40 per cent stake to public after pricing its shares at the top of the indicated range this month.

The ADNH Catering public offering followed NMDC Energy, a unit of Abu Dhabi contractor National Marine Dredging Company, which began trading on the ADX after completing the largest IPO in the Emirates this year.

The float, which was oversubscribed by more than 31 times, raised Dh3.22 billion through the sale of 23 per cent of the company's total share capital to retail and qualified institutional investors at Dh2.8 per share.

The NMDC Energy deal surpassed the $515 million raised by Alef Education in June but is smaller than health care operator Pure Health’s $986 million listing in December last year.

IPO pipeline

The pipeline of potential IPOs is also growing, with Delivery Hero, the Germany-based food delivery platform, announcing in August that it is preparing to list shares of its UAE subsidiary, Talabat, on the Dubai bourse.

In June, UAE-based hospital operator NMC Healthcare also appointed Rothschild as a financial adviser to help explore strategic options for its shareholders, including an IPO.

Etihad Airways, the UAE's flag carrier, is also preparing for a potential listing, which would be a first for a major Gulf airline as it pursues an ambitious growth strategy between now and 2030, its chief executive Antonoaldo Neves told The National in March.

Markets across the Gulf region have seen steady rise in IPO activity over the past two years, with Saudi Arabia's Tadawul leading the deal volume during the second quarter.

Companies in the kingdom raised an aggregate of $1.6 billion, or 61 per cent, of the total IPO activity recorded during the period, while issuers in the UAE raised $890 million through IPOs during the April-June period, according to PwC's quarterly IPO Watch report.

Companies in Dubai alone raised Dh34.5 billion by selling shares in the past three years on the Dubai Financial Market, with the aggregate investor demand for those listings exceeding more than Dh1 trillion, the Dubai Securities and Exchange Higher Committee said in March.

Dividend and expansion plans

Lulu Group, which has maintained strong growth momentum across the Gulf, especially in the UAE and Saudi Arabia, is targeting a total dividend payout ratio of 75 per cent of annual distributable profits after tax, paid semi-annually. The company aims to pay dividends for the six months ending December 31, 2024, in the first half of 2025.

Lulu Group, which delivered a 5.6 per cent annual increase in revenue to $3.9 billion in the first six months of this year, has carried growth momentum from last year when its top-line grew by more than 5.6 per cent to $7.3 billion.

The company said its revenue was primarily driven by “sales growth from existing stores and further expansion of the group’s store network, as well as growth from its online channel”.

Lulu aims to open 80 more hypermarkets in Gulf region and other countries in the next two years, Mr Ali told The National last year.

“The group believes that it is well positioned to increase its market share and grow its store network, with a primary focus on the Saudi Arabia and UAE,” the company said on Monday. “In other markets, the group plans to grow by selectively opening stores and maintaining its market share and leadership positions.”