Lulu Retail Aims for $1.43 Billion IPO in Abu Dhabi

Lulu Retail Holdings Plc, one of the top grocery chains in the Gulf, is gearing up for a major initial public offering (IPO) in Abu Dhabi, targeting up to 5.27 billion dirhams (approximately $1.43 billion). This move is set to make it the largest IPO in the United Arab Emirates this year.

The hypermarket operator has announced a share price range between 1.94 dirhams and 2.04 dirhams, which would give it a market capitalization of about 21.1 billion dirhams if priced at the upper end. Lulu International Holdings plans to offer 2.58 billion shares, equating to a 25% stake in the company. The final share price will be confirmed on November 6, with trading expected to commence on November 14.

Several institutional investors have already committed to the offering, including the Abu Dhabi Pension Fund and the Oman Investment Authority, pledging around 753 million dirhams in total.

Despite ongoing regional tensions, the Middle East has witnessed a surge in new share sales this year, accumulating nearly $8 billion, with the UAE contributing about 30% of this total. Lulu’s IPO aims to surpass the previous record for this year, set by oil services firm NMDC Group at $877 million.

Founded by Indian entrepreneur Yusuff Ali, Lulu operates one of the largest hypermarket chains in the Middle East, reporting a profit of $192 million last year. The company plans to maintain a strong dividend payout ratio of 75% and aims for net profit margins to rise to 5% over the medium term, up from 2.6% in 2023.

Looking ahead, Lulu plans to expand significantly, with plans to open around 90 new stores across the Gulf in the next five years, focusing primarily on Saudi Arabia and the UAE. Abu Dhabi Commercial Bank, Citigroup, Emirates NBD Capital, and HSBC Holdings are serving as joint global coordinators for the IPO, with Moelis & Co. acting as an advisor on the deal.