Lulu Retail Holdings, the owner of one of the largest hypermarket chains in the Middle East, will raise as much as 5.27 billion dirhams ($1.43 billion) from an initial public offering, the biggest IPO this year in the United Arab Emirates. The conglomerate operates more than 240 stores across the Gulf Cooperation Council region and will be listed on the Abu Dhabi Securities Exchange on November 14.
PC: CNBC TV18
Offering Details and Pricing
The IPO involves the sale of 2.582 billion shares representing 25% equity in the company at an indicative price range of 1.94-2.04 dirhams per share. At such a price, the market capitalization of Lulu Retail amounts to $5.46-5.74 billion. The move follows the line of strategy as the companies intend to utilise the expanding retail spending in the Middle East, similar to those of other recent retail listings in the region.
Lulu Retail was founded in 1974 by Indian businessman Yusuff Ali. It has grown into an important player in the Middle Eastern retail market. It follows other big-ticket IPOs in the region by retail companies: Spinneys from UAE and BinDawood Holding from Saudi Arabia.
Cornerstone Investors
To further support the IPO, Lulu Retail has cornerstone investors in the Abu Dhabi Pension Fund, Emirates International Investment Company (EEIC), and the sovereign wealth funds of Bahrain and Oman. These have collectively agreed to invest around $205 million in the offering. The participation of such institutional investors would further bolster confidence in the market potential of Lulu and stabilise demand for its shares.
Regional Retail Boom
Lulu’s initial public offering has come at a time when retail spending is booming in the entire Gulf region. Consumer demand continues to drive major hypermarket chains. The trend has gained the attention of investors because there have been similar regional listings in the past. A new retail landscape is opening in the GCC, and Lulu’s IPO reflects this confidence in further growth and profitability in the sector.
It will further increase its current market share and compete for more in the competitive markets of the Middle East and expand further in the region, especially within the GCC and beyond, through a fund-raising plan from a public offering. With its expected market capitalization, Lulu will join major publicly listed companies in the UAE, making the strong retail industry of the region and attractive investment opportunities evident.
