UAE-based retail giant Lulu Group has announced plans to launch an initial public offering (IPO) next week, selling 25% of its shares.
The company, Lulu Retail Holding, will be listed on the Abu Dhabi Securities Exchange, with the expected listing date set for November 14, 2024. The IPO will consist of over 2.582 billion shares with a nominal value of Dh0.051 each.
According to a prospectus published by Khaleej Times, the IPO will be conducted in three tranches, beginning on October 28 and closing on November 5. The offer price range will be disclosed on or before the start of the offering. The joint lead receiving banks include Abu Dhabi Commercial Bank and First Abu Dhabi Bank, while the joint lead managers are Abu Dhabi Commercial Bank, Emirates NBD Capital, First Abu Dhabi Bank, HSBC Bank Middle East, and EFG Hermes UAE. Other receiving banks include First Abu Dhabi Bank, Dubai Islamic Bank, Emirates Islamic Bank, Abu Dhabi Commercial Bank, Mashreq, and Emirates NBD.
The UAE has seen numerous IPOs from both public and private entities in recent years, including companies like Dubai Taxi Corporation, Salik, Al Ansari Exchange, Pure Health, Investcorp Capital, and more. Given the strong demand for past IPOs, analysts expect Lulu’s share sale to attract significant interest from investors.
Lulu Group, one of the largest retailers in the UAE and GCC region, employs over 50,000 workers. The upcoming IPO has been anticipated by investors who are eager to own a stake in the major retailer. ADQ previously acquired a 20% stake in Lulu for $1 billion in 2020, aiding the group’s expansion into new markets.
The IPO’s first tranche, for individual subscribers and eligible employees, will offer 258.222 million shares, representing 10% of the offer. Each subscriber, excluding eligible employees, will receive a minimum guaranteed allocation of 1,000 shares, while eligible employees will have a guaranteed minimum allocation of 2,000 shares. The minimum application size for first tranche subscribers is Dh5,000, with additional applications made in Dh1,000 increments.
The second tranche, designated for institutional investors, will offer 2.298 billion shares, representing 89% of the offer. The minimum application size for this tranche is Dh5 million, with no maximum limit. Meanwhile, the third tranche will offer 25.822 million shares to senior executives, representing 1% of the total offer, with a minimum application size of Dh50,000.
The selling shareholders will adhere to a 180-day lock-up period following the listing.
Lulu Group operates over 240 stores across the GCC, making it the largest retailer in the region by selling space, sales, and store count in 2023. It was the second-largest grocery retailer in the UAE and the largest in Oman, Qatar, Bahrain, and Kuwait while also being the fastest-growing pan-GCC retailer in Saudi Arabia. The group’s omnichannel presence includes hypermarkets, express stores, and mini-markets.
By August 2024, the group had 116 hypermarkets, 102 express stores, and 22 mini-markets, with 103 stores in the UAE, 56 in Saudi Arabia, and 81 in other markets. As of December 2023, Lulu had around 1.3 million square meters of selling space, triple the average of its listed competitors. The company served over 600,000 daily shoppers on average in 2023 and sources products from 85 countries via its 21 distribution centres in the GCC.
Lulu joins other grocery retailers like Spinneys, which was listed earlier this year, and Saudi Arabia’s BinDawood Holding, which went public in 2020.
Dividend Policy
Lulu Group plans to distribute 75% of its annual distributable profits after tax as dividends, paid semi-annually. The first dividend will be paid in the first half of 2025 for the six-month period ending December 31, 2024.
In 2023, the company recorded $7.27 billion (Dh26.7 billion) in revenues, up from $6.89 billion in 2022.
Yusuffali MA, founder, chairman and non-Executive director of Lulu Retail, said the firm, which was founded in 1974, has exceeded its own expectations as it operates more than 240 stores across six GCC countries.
“Integral to our growth is the vision and ambition of the UAE, KSA and other GCC nations where strong national leadership is enabling positive demographic and consumption trends and driving impressive economic growth. We’re looking forward to welcoming new shareholders to Lulu and are sure they will share our passion for the company and excitement for the future,” he said.
“Lulu is a brand synonymous with retail in the GCC and we’re incredibly proud to announce the launch our IPO today. 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 Saudi Arabia. Every day, Lulu serves more than 600,000 shoppers, enabled by our unmatched international sourcing network across 85 countries, ensuring we are deeply rooted in all GCC markets and able to offer over 200,000 active SKUs, catering to all our customers’ diverse needs,” he added.
“Our scale is combined with a track record of delivering robust revenue growth, attractive profit margins and a well-defined growth strategy built around enhancing and delivering greater value from our existing stores, expanding our store network, delivering operational efficiencies and growing our high-value private label and loyalty programs”, said Saifee Rupawala, CEO of Lulu Retail.
“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.
