Lulu Retail Holdings Plc on the Abu Dhabi market is projected to price at the upper end of its range, raising $1.43 billion. This will establish it as the largest listing in the UAE for 2024, marking a significant achievement in the country’s capital markets. According to Bloomberg, the IPO is expected to price shares at 2.04 dirhams ($0.56) each, which would value the hypermarket giant at 21.1 billion dirhams.
Strong Demand and Record-Breaking Interest
Lulu’s IPO has seen remarkable demand, with all shares being claimed within just an hour of the books opening last week. This offering surpasses the previous largest IPO of the year by NMDC Energy, which raised $877 million. The strong demand highlights investors’ eagerness for exposure to Lulu’s extensive retail network and its growth potential in the region.
The listing will involve Lulu International Holdings selling 2.58 billion shares, which represents a 25% stake in the company. Final pricing is anticipated on November 6, with the company’s shares scheduled to debut on the Abu Dhabi Securities Exchange (ADX) on November 14.
Expanding Footprint Across the Middle East
Founded by Indian entrepreneur Yusuff Ali, Lulu operates one of the largest hypermarket chains in the Middle East. The company plans to use the proceeds from its IPO to support a major expansion, with 90 new stores set to open over the next five years throughout the Gulf region. Saudi Arabia and the UAE are the main markets targeted for this growth, aligning with Lulu’s strategic goals in response to the rising demand for retail and grocery products in these areas.
Last year, Lulu reported a profit of $192 million and has committed to a high dividend payout ratio of 75%, which is likely to attract income-focused investors. Its net profit margins are expected to increase to 5% over the medium term, up from 2.6% in 2023, indicating improvements in efficiency and strong financial health.
Boosting UAE’s Private Sector and Stock Market
The Lulu IPO marks a significant moment for the UAE’s private sector, as more family-owned and private companies are considering public listings, which will enhance diversity and liquidity in the nation’s markets. The success of Lulu’s IPO is expected to set a precedent, encouraging other private businesses in the region to explore going public and raising capital.
