UAE’s Lulu Retail sets IPO price range of up to Dhs2.04 per share

Lulu Retail Holdings has started taking investor orders for its initial public offering (IPO) as the GCC region’s top grocer seeks to raise as much as $1.43bn (Dhs5.27bn) in what’s set to be the UAE’s biggest offering in 2024.

The conglomerate, which runs more than 240 stores in the Gulf region, is offering 2.6 billion shares, equivalent to a 25 per cent stake of the hypermarket chain operator.

The indicative share price of Dhs1.94 and Dhs2.04 per share implies a market valuation of around $5.74bn (Dhs21.07bn) at the top end of the price range.

Lulu Retail is offering the shares in two tranches – institutional investors and retail investors – between October 28 and November 5. The final offer price is expected to be announced on November 6, and the shares are scheduled to debut on the Abu Dhabi Securities Exchange on November 14.

The hypermarket chain operator’s IPO drew in four cornerstone investors – Abu Dhabi Pension Fund Bahrain Mumtalakat, Emirates International Investment Company and Oman Investment Authority – that will subscribe for a total of $205m shares.

Lulu Retail operates one of the Middle East’s largest hypermarket chains. It reported a profit of $192m last year and aims to maintain a dividend payout ratio of 75 per cent. The UAE-based grocer’s net profit margins are expected to reach 5 per cent over the medium term, up from 2.6 per cent in 2023, Saifee Rupawala, CEO of Lulu Retail, told Bloomberg News.

“Our offering presents a unique opportunity for local and international investors to participate in the growth of the largest pan-GCC retailer by market share and the fastest-growing player of scale in Saudi Arabia,” said Rupawala.

“More than 600,000 people shop with Lulu every day across our multiple store formats, which cater for all shopping experiences and bring the world to the GCC through our diverse and extensive product range.”

Founded by Indian entrepreneur Yusuff Ali in 1974, Lulu Retail plans to open about 90 stores across the GCC region over the next five years, with Saudi Arabia and the UAE slated as its main expansion markets.

The company has hired Abu Dhabi Commercial Bank PJSC, Citigroup, Emirates NBD Capital and HSBC Holdings as joint global coordinators on the sale while Moelis & Co. is an advisor on the deal.

Lulu Retail joins a flurry of new share sales this year, which have raised just shy of $8bn, with the UAE accounting for around 30 per cent — despite ongoing geopolitical tension in the Middle East. The offering would dwarf the $877m share offering from oil services firm NMDC Group, which is the country’s biggest IPO this year.

Read: Saudi Arabia’s United International Holding to sell 30% stake via IPO