Lulu Retail Holdings Set for $1.43 billion IPO, poised to become UAE’s biggest listing of the year

Lulu Retail Holdings Plc’s Abu Dhabi initial public offering is likely to price at the top end of a planned range and raise $1.43 billion, making it the United Arab Emirates’ biggest listing of the year.

The deal is expected to price at 2.04 dirhams ($0.56) a share, according to terms of the deal seen by Blomberg News. That’s the top end of a range that started at 1.94 dirhams, and implies a market capitalisation for the grocer of 21.1 billion dirhams.

The firm had demand for all shares on offer an hour after books opened on the deal last week, Bloomberg News has reported. The IPO is set to be the UAE’s biggest listing of the year, eclipsing oil services firm NMDC Energy’s $877 million share offering.

Lulu International Holdings plans to sell 2.58 billion shares on a 25% stake in the firm. Final pricing is expected on November 6, and the shares are schedules to begin trading on November 14.

The firm 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 offer told Bloomberg.

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.

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.