Top Grocer LuLu’s Listing Set to Extend Middle East IPO Boom

LuLu Retail Holdings Plc, which operates one of the Middle East’s largest hypermarket chains, unveiled plans to list in Abu Dhabi in what could be among the region’s biggest initial public offerings of the year.

Its owners plan to sell 2.58 billion shares in the firm, or a 25% stake, according to a statement. They are seeking a valuation of at least $5 billion, people familiar with the matter told Bloomberg News last week. 

LuLu was valued at more than $5 billion in 2020 when an investment firm backed by a member of Abu Dhabi’s royal family bought a fifth of the company. The firm is starting roadshows this week to gauge interest, Bloomberg News has reported. 

“As far as investors are concerned, we have seen very strong demand from international investors and from the region,” Chief Executive Officer Saifee Rupawala said in an interview on Monday. 

The offer period for LuLu’s IPO will start Oct. 28, with an announcement on the final price on Nov. 6, while trading is expected to commence Nov. 14.

The Middle East has seen $8 billion worth of new share sales this year. Oman’s state energy company last week raised $2 billion from the IPO of its exploration and production business, marking the sultanate’s biggest listing on record. 

That deal was also the largest Gulf IPO since Adnoc Gas Plc’s $2.5 billion share sale in 2023, and drew aggregate demand of $5.4 billion, indicating continued interest despite escalating violence in the Middle East. There are more listings in the offing — Abu Dhabi flag carrier Etihad Airways is eyeing a share sale, while Saudi Arabia’s wealth fund is planning to list the kingdom’s largest medical procurement firm.

LuLu will pay up to 75% of net profit as dividend, Rupawala said. The company had reported a profit of $192 million last year. Net profit margins are expected to reach 5% over the medium term, up from 2.6% in 2023, he said. 

Founded by Indian entrepreneur Yusuff Ali, the firm plans to open about 90 stores across the Gulf over the next five years, with Saudi Arabia and the United Arab Emirates slated as its main expansion markets. 

While LuLu initially considered a dual listing in Riyadh, it now plans to sell shares only in Abu Dhabi. “We were looking to different markets, but ultimately settled on ADX (Abu Dhabi Securities Exchange),” Rupawala said. “It’s where our journey begins from.”

The firm has picked Abu Dhabi Commercial Bank PJSC, Citigroup Inc., Emirates NBD Capital and HSBC Holdings Plc as joint global coordinators. 

The potential share sale would follow high-end supermarket chain Spinneys 1961 Holding Plc’s Dubai listing. The stock had a relatively muted debut, and Spinneys shares are largely unchanged from their offer price.