UAE retailer Lulu to launch IPO next week, sell 25% stake

The UAE retail giant Lulu Group on Monday announced that it would sell 25 per cent shares through an initial public offering (IPO) with a nominal value of Dh0.051 each.

According to a prospectus published in on Monday, the company will sell over 2.582 billion (2,582,226,338) shares through a three-tranche IPO which will commence on October 28 and close on November 5.

Lulu Retail Holding will be listed on the Abu Dhabi Securities Exchange. The listing is expected on November 14, 2024. The offer price range will be announced on the same day or before the opening of the offering on October 28.

Joint lead receiving banks are Abu Dhabi Commercial Bank and First Abu Dhabi. Joint lead managers are Abu Dhabi Commercial Bank, Emirates NBD Capital, First Abu Dhabi Bank, HSBC Bank Middle East and EFG Hermes UAE. The receiving banks are First Abu Dhabi Bank, Dubai Islamic Bank, Emirates Islamic Bank, Abu Dhabi Commercial Bank, Mashreq and Emirates NBD.

The UAE has seen a host of IPOs from public and private sector entities over the past couple of years including Dubai Taxi Corporation, Salik, Al Ansari Exchange, Pure Health, Investcorp Capital, Phoenix Group, Adnoc entities and many others.

The previous IPOs witnessed exceptionally strong demand from retail and institutional investors. Analysts are confident that Lulu’s share sale will also see an overwhelming response from the investors next week.

Lulu Group is one of the largest retailers in the UAE and GCC region, employing over 50,000 workers. Investors have been waiting for the retail giant’s IPO to own a stake in the retail major.

ADQ had bought a 20 per cent stake in the company for $1 billion in 2020, which helped the retailer to expand to new markets.

Under the first tranche, 258.222 million shares will be up for subscription, representing 10 per cent of the offer share. Each subscriber – other than eligible employees – will have a minimum guaranteed allocation of 1,000 shares and each eligible employee will have a minimum guaranteed allocation of 2,000 shares.

Under the second tranche, Lulu Retail aims to offload 2,298,181,441 shares, representing 89 per cent of the off share. Over 25.822 million shares will be sold through the third tranche, representing one per cent of the offer share.

The selling shareholders reserve the right to amend the public subscription, according to the prospectus.

The selling shareholders will have a lock-up period of 180 days after the listing on the Abu Dhabi Securities Exchange.

Lulu Group is the largest full-line retailer with stores in all GCC countries by selling space, sales and number of stores in 2023. The Group was the second-largest grocery retailer in UAE and largest in Oman, Qatar, Bahrain, and Kuwait and the fastest-growing and largest pan-GCC retailer in Saudi Arabia, according to market consultants. It currently has a strong omni-channel presence in the form of 3 formats – hypermarkets, express stores and mini-markets.

By August 2024, the group operated 240 stores, comprising 116 hypermarkets, 102 express stores and 22 mini markets with 103 stores located in the UAE, 56 in Saudi Arabia and 81 across other markets.

The group’s total selling space as of December 31, 2023, was approximately 1.3 million square metres, which was around 3 times higher than the average selling space of its listed peers in the GCC. The retailer, on average, served over 600,000 daily shoppers every day in 2023. Sourcing products from 85 countries, it operates a network of 21 distribution centres in the GCC to support its retail operations.