Lulu IPO: Retailer aims to raise up to $1.43bn from Abu Dhabi listing

UAE retail major Lulu Group is aiming to raise up to Dh5.27 billion ($1.43 billion) from its initial public offering in Abu Dhabi, which would make it the largest listing in the UAE so far this year, as the company seeks to tap into the UAE's economic momentum and market strength.

The hypermarket chain operator set the price range for the IPO on the Abu Dhabi Securities Exchange at Dh1.94 and Dh2.04 per share, it said in a statement on Monday. The company plans to float 2,582,226,338 shares on the ADX's main bourse, and based on its offer price range, the company would have a market valuation of up to Dh21.07 billion ($5.74 billion) on the listing, it said.

The subscription period for the public float opened today and will end on November 5 for retail, institutional and senior executive tranches.

The final offer price will be determined through a book-building process and is expected to be announced on November 6. Lulu expects its shares to begin trading on the ADX on November 14.

All shares offered through the public float are being sold by the company’s sole shareholder, Lulu International Holdings.

Lulu 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, Saifee Rupawala, chief executive of Lulu Retail, said.

“Our offering presents a unique opportunity for local and international investors to participate in [Lulu's] growth … we continue to invest in our business to drive growth and loyalty … while also opening new stores, enhancing our operational efficiencies, growing our private label range and our online and e-commerce business,” he said.

Lulu also expects up to 10 per cent revenue growth this year with plans to open new stores in the Gulf region as it moves forward with its IPO, its chief financial officer Prasad KK told The National last week.

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

Lulu is the latest company seeking to sell shares to the public amid an increase in listings in the UAE driven by robust investor demand for new issues. The continued economic momentum in the country has also boosted listings across sectors on both the ADX and the Dubai Financial Market.

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 this month. The ADNH Catering public offering followed NMDC Energy, a unit of Abu Dhabi contractor National Marine Dredging Company, which began trading on the ADX after raising $877 billion.

The NMDC Energy deal surpassed the $515 million raised by Alef Education in June but is smaller than healthcare operator Pure Health’s $986 million listing in December last year.

The pipeline of potential IPOs is also growing, with Delivery Hero, the Germany-based food delivery platform, announcing in August that it is preparing to list shares of its UAE subsidiary, Talabat, on the Dubai bourse.

Etihad Airways, the UAE's flag carrier, is also preparing for a potential listing, which would be a first for a major Gulf airline as it pursues an ambitious growth strategy between now and 2030, its chief executive Antonoaldo Neves told The National in March.

“We remain confident we will achieve our guidance targets in 2024 and beyond, and the offer price range reflects our desire to prioritise a supportive aftermarket performance post-listing,” Mr Rupawala said.

Lulu's revenue in the first half of 2024 rose 5.6 per cent to $3.9 billion after it reported a 5.6 per cent annual increase in revenue last year to $7.3 billion. The UAE accounts for 36 per cent of its total revenue, followed by Saudi Arabia at 19 per cent and Oman at 17 per cent.