Lulu’s $1.72bn Abu Dhabi IPO attracts bids worth Dhs135bn

Lulu Retail Holdings said on Wednesday that it has attracted $36.8bn (Dhs135bn) in orders for its $1.72bn initial public offering (IPO) on the Abu Dhabi Securities Exchange (ADX), as investors flock to the Middle East, where a variety of businesses from retail to beauty and health care are preparing to list.

Lulu sold 3.10 billion shares, equivalent to 30 per cent of the grocer’s paid-up capital, at Dhs2.04 ($0.56) apiece, the top of a marketed range. The pricing of Dhs2.04 per share implies a market valuation of around Dhs21.07bn at listing.

The hypermarket chain operator initially planned to sell a 25 per cent stake and raise as much as $1.43bn, but it increased the size of the IPO, citing strong investor interest.

“The high level of demand reflects Lulu Retail’s attractive investment proposition and iconic brand, which is built on our leading pan-GCC market position, commitment to world-class customer experience, robust financial performance, and a well-defined strategy for growth,” said Saifee Rupawala, CEO of Lulu Retail.

Lulu’s IPO attracted GCC sovereign wealth funds and global investors, including Saudi Arabia’s Public Investment Fund and Hassana, Qatar Investment Authority and Kuwait Investment Authority, Singapore’s GIC, and Vanguard Group as cornerstone investors.

Previously, the conglomerate said it had secured commitments from Abu Dhabi Pension Fund, Bahrain Mumtalakat, Emirates International Investment Company and Oman Investment Authority – which bought shares worth $205m.

Lulu’s offering marks the latest in a series of private sector listings across the Middle East, offering investors a broader choice beyond state-owned assets.

Founded by Indian entrepreneur Yusuff Ali in 1974, Lulu Retail plans to open about 90 stores across the GCC region over the next five years, with Saudi Arabia and the UAE slated as its main expansion markets.

The company operates one of the Middle East’s largest hypermarket chains. It reported a profit of $192m last year and aims to maintain a dividend payout ratio of 75 per cent.

Lulu hired Abu Dhabi Commercial Bank PJSC, Citigroup, Emirates NBD Capital and HSBC Holdings as joint global coordinators on the sale while Moelis & Co. is an advisor on the deal. It joins a flurry of new share sales this year, which have raised just shy of $8bn, with the UAE accounting for around 30 per cent — despite ongoing geopolitical tension in the Middle East.

PwC said the outlook for the GCC IPO market remains buoyant, with a healthy IPO pipeline of companies from a diverse range of sectors busy preparing for their upcoming listings across the region.

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