UAE retailer LuLu IPO opens October 28, retail investors to get 'minimum' 1,000 shares
Offer price to be announced on Oct. 28; dividends to be paid half-yearly
Dubai: October 28 is the opening date for subscriptions to the LuLu Retail IPO, one of the most anticipated stock market offerings in the UAE in recent times. The Abu Dhabi headquartered hypermarket operator with an extensive network in the Gulf and beyond is offering a 25% stake through the float.
Retail investors will be offered 10% via the IPO – and with a minimum guaranteed allocation of 1,000 shares. (Eligible LuLu employees taking part in the subscription will have a minimum guarantee of 2,000 shares.) It’s a given that this will be one of the most heavily backed IPOs in the UAE from an individual investor’s perspective.
The share offer price will be announced prior to the start of subscription on October 28 and runs through to November 5. The LuLu stock is to list on ADX.
"We’re looking forward to welcoming new shareholders to Lulu and are sure they will share our passion for the company and excitement for the future,” said Yusuffali M.A., founder and Chairman of the Group.
Dividend policy
The UAE group plans to issue semi-annual dividends, equating to 75% of distributable profits.
As of end August, the LuLu GCC network of 240 stores comprised 116 hypermarkets, 102 express stores and 22 mini markets. It had 103 stores in the UAE, 56 in Saudi Arabia, and 81 stores in the other GCC markets.
For retail investors, the minimum subscription level is Dh5,000 and in multiples of Dh1,000 for additional shares. The hope among many retail investors is that LuLu would consider raising the issue size to meet the kind of interest it would generate.
For institutional investors – assigned 89% in the IPO – the minimum subscription is set at Dh5 million.
Reaches the market at a time when the retailer has consolidated its presence in the UAE and other Gulf markets. In the recent past, it has made a concerted push into Saudi Arabia, markets in the Far East and elsewhere. It has also expanded its distribution base and localized sourcing, thus cushioning it to a great extent from disruptions in global supply chains.
When it comes to physical stores, the Group claims a 13.5% share in the GCC grocery market as of end 2023.
In online, LuLu has seen progress, helped by partnerships with the likes of Amazon in the UAE and HungerStation in Saudi Arabia. Plus, it has an alliance with Talabat.
"With GCC retail presenting a $100 billion market opportunity over the next five years and our business in Saudi Arabia primed for further growth, we are confident that Lulu will continue to be where the world comes to shop," said Saifee Rupawala, CEO of LuLu Retail.
600,000
Incidentally, this is the second UAE based grocery retailer heading to the stock market this year. Earlier, there was the one from Spinneys. (Another grocery retailer, Union Coop, is also listed, but the stock was offered only to existing UAE National shareholders.)
It was last year that LuLu confirmed it was lining up an IPO as it continued with ambitious expansion across key regional markets.
Apart from targeting new locations, LuLu has in recent years made marked changes to its retail strategy. The extra focus on online sales was an obvious thing to do, but the retailer’s investments in expanding its kitchen counters at all of its major supermarkets/hypermarkets paid off. So too did the move to widen its private label business, which was about selling high-demand commodities under its branding.
"Lulu’s operational growth, footprint as well as its brand name recognition makes it a contender for a strong response from retail and institutional investors," said Sameer Lakhani, Managing Director at Global Capital Partners. "The retailer has a healthy top- and bottom-line growth across all of its key segments."