Lulu Retail IPO Set To Be The Largest Of UAE In 2024, Looks To Raise $1.43 Billion From Abu Dhabi Issue

Lulu Retail Holdings Plc is gearing up for the largest initial public offering (IPO) of 2024 in the United Arab Emirates, aiming to raise $1.43 billion at the top end of its set price range, according to a Bloomberg report released on November 4. With strong demand from investors, the IPO pricing is expected at 2.04 dirhams ($0.56) per share, potentially pushing Lulu Retail's market valuation to an impressive 21.1 billion dirhams.

The IPO has already attracted significant investor interest, surpassing previous high-profile listings such as NMDC Energy's $877 million IPO earlier this year. Lulu Retail, one of the Middle East's most prominent hypermarket chains, is looking to sell a 25% stake, representing approximately 2.58 billion shares. The final price will be confirmed on November 6, with trading set to commence on November 14 on the Abu Dhabi stock exchange.

Lulu Retail operates a vast network of hypermarkets across the Middle East, making it a familiar name in the region's retail landscape. The company was founded by Indian entrepreneur Yusuff Ali and has since grown to become a dominant force in the Gulf Cooperation Council (GCC) countries. Known for its product range and value-focused approach, Lulu Retail has captured a large customer base across the UAE, Saudi Arabia, and beyond.

In 2023, Lulu reported a profit of $192 million, an impressive financial foundation that reflects the brand's steady growth trajectory. According to the company's CEO, Lulu is setting its sights on maintaining a dividend payout ratio of 75% for shareholders.

Expansion Plans

Lulu Retail has plans for the next five years, with a targeted expansion of 90 new stores across GCC countries, with Saudi Arabia and the UAE identified as prime markets for growth. These expansion efforts align with the company's strategy to strengthen its presence in the region and meet the increasing demand for high-quality retail options.

Profit margins for Lulu are expected to grow, with a target of 5% in the medium term, a notable increase from the 2.6% margin recorded in 2023. This anticipated improvement signals a positive outlook for the retailer's profitability, driven by both the efficiency of operations and the planned market expansion.

Big Players Involved in the IPO

Several financial heavyweights are coordinating this major public offering. Abu Dhabi Commercial Bank PJSC, Citigroup Inc., Emirates NBD Capital, and HSBC Holdings Plc are acting as joint global coordinators, while Moelis & Co. serves as the primary advisor for the sale.

Investor Response

Since Lulu opened its IPO books last week, investor interest has surged, showcasing the high demand for shares in this retail giant. Market analysts attribute the enthusiasm to Lulu's established brand reputation, robust financial performance, and strategic expansion plans. The retail sector in the UAE has been showing resilience and growth, and Lulu's IPO could further enhance the sector's dynamism on the Abu Dhabi stock exchange.

Once trading begins on November 14, this IPO will likely make waves, setting a new benchmark for future listings in the UAE and beyond. As the largest listing of the year, Lulu Retail's public offering not only underscores its growth story but also highlights Abu Dhabi's appeal as a hub for major market transactions.