Lulu IPO: Retailer raises $1.72bn in UAE’s largest listing this year

Offering received total demand of over $37 billion from local, regional, and international investors

A Lulu Xpress branch in Abu Dhabi. The company’s shares are expected to commence trading on the Abu Dhabi Securities Exchange on November 14. AFP

UAE retail major Lulu Group has raised Dh6.32 billion ($1.72 billion) through its initial public offering, making it the country's largest listing so far this year. The hypermarkets chain operator priced its shares at the top of the indicated range amid strong investor demand for listings in the region.

The retailer set the final price at Dh2.04 per share for its public float on the Abu Dhabi Securities Exchange, it said on Wednesday.

It offered 3,098,671,605 ordinary shares, or 30 per cent of its total share capital, implying a market valuation on listing of Dh21.07 billion.

The float, which was oversubscribed by more than 25 times across all tranches (excluding cornerstone investors), received aggregate demand of over Dh135 billion from local, regional, and international investors.

"We’re pleased to see extremely strong and record demand from UAE retail investors, with more than 82,000 subscribing for shares," Saifee Rupawala, chief executive of Lulu Retail, said. "We look forward to rewarding the trust shown by investors in Lulu and remain confident we will achieve our guidance targets in 2024 and beyond."

The company’s shares are expected to commence trading on the Abu Dhabi Securities Exchange on November 14, subject to regulatory approvals.

On Monday, Lulu Retail boosted the size of its IPO to 30 per cent of its shares, up from 25 per cent, on strong demand and an additional cornerstone investor.

The total offering size was increased to 3,098,671,605 ordinary shares, with the additional 516,445,267 shares allocated to professional investors, it said at the time.

The new cornerstone investor is Saudi Arabia's Masarrah Investment Company, which joined Abu Dhabi Pension Fund, Bahrain's Mumtalakat, Emirates International Investment Company and the Oman Investment Authority.

Masarrah Investment Company agreed to invest about Dh250 million and the aggregate commitments of all the cornerstone investors are about Dh1 billion, Lulu said on Monday.

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.

The retailer 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 and in the first half of 2025.

It expects “strong macroeconomic growth” across its network, driven by favourable demographic and consumption trends, Mr Rupawala said earlier.

Lulu Retail plans to open an additional eight branches this year in the UAE, Saudi Arabia and Oman. It has opened 13 shops in the Emirates so far this year and aims to add about 19 in 2025, mainly in the UAE and Saudi Arabia, officials said last month.

The Abu Dhabi-based company expects up to 10 per cent revenue growth this year, its chief financial officer Prasad KK told The National.

“The UAE is our main market and Saudi Arabia is our growth market. We are growing across the two markets,” he said at the time.

The retailer's IPO is the latest in a string of listings across the UAE, driven by robust investor demand for new issues amid economic growth momentum in the country.

ADNH Catering, a unit of Abu Dhabi National Hotels, raised Dh864 million through the sale of a 40 per cent stake to the public after pricing its shares at the top of the indicated range last month. NMDC Energy, a unit of Abu Dhabi contractor National Marine Dredging Company, also began trading on the ADX in September after raising $877 million, while Alef Education raised $515 million from its IPO in Abu Dhabi in June.

IPO activity in the Mena region remained strong in the third quarter of this year, with five IPOs raising $0.93 billion, according to EY. The proceeds are higher by 76.8 per cent on a year-on-year basis.

An additional 11 private companies across various sectors as well as five funds intend to list on the MENA exchanges by the end of this year, according to EY's Mena IPO Eye Q3 2024 report.