Top Grocer Lulu Boosts Size Of Abu Dhabi IPO To $1.72 Billion

(Bloomberg) --Lulu Retail Holdings Plc increased the number of shares on offer in its Abu Dhabi initial public offering, and now targets raising as much as $1.72 billion in the United Arab Emirates’ biggest listing of the year.

Lulu International Holdings now plans to offer a 30% stake in the firm, or 3.10 billion shares, it said in a statement Monday. The price range remains unchanged at 1.94 dirhams ($0.53) to 2.04 dirhams per share.

The deal is likely to price at the top end, Bloomberg News reported earlier on Monday. Lulu previously planned to sell 2.58 billion shares, or a 25% stake, and raise as much as $1.43 billion. The firm had demand for all shares on offer an hour after books opened on the deal last week.

The firm cited a “significant level of demand received from international, regional and local investors, and the inclusion of additional cornerstone investors to the IPO,” as the reason for the increase. Saudi Arabia’s Masarrah Investment Co. will buy shares worth 250 million dirhams, it said.

Institutional investors including Abu Dhabi Pension Fund, Bahrain Mumtalakat Holding Company Co., Emirates International Investment Co., and Oman Investment Authority had already agreed to subscribe for shares worth 753 million dirhams.

Lulu operates one of the Middle East’s largest hypermarket chains. It reported a profit of $192 million last year, and aims to maintain a dividend payout ratio of 75%. Its net profit margins are expected to reach 5% over the medium term, up from 2.6% in 2023, its chief executive officer told Bloomberg News.

The company — founded by Indian entrepreneur Yusuff Ali — plans to open about 90 stores across the Gulf over the next five years, with Saudi Arabia and the UAE slated as its main expansion markets.

Final pricing is expected on Nov. 6, and the shares are scheduled to begin trading on Nov. 14. Abu Dhabi Commercial Bank PJSC, Citigroup Inc., Emirates NBD Capital and HSBC Holdings Plc are the joint global coordinators on the sale. Moelis & Co. is an advisor on the deal.

The Middle East has seen a flurry of new share sales this year, which have raised just shy of $8 billion — with the UAE accounting for around 30% — despite the conflict in the region. Oman’s state energy company unveiled plans for an IPO of its methanol and liquefied petroleum gas unit on Monday, while the share sale of a Saudi financial services firm is also likely to price at the top end of a range, Bloomberg News reported.

LuLu’s IPO will be the biggest private sector listing in the region in 2024, and there are more in the pipeline. Delivery Hero SE’s Middle Eastern unit Talabat and IT services firm Alpha Data are preparing to list in the UAE before year end.

High-end supermarket chain Spinneys 1961 Holding Plc had raised $374 million from a Dubai listing in May, though the stock had a relatively muted debut and its shares still trade around the offer price.