Grocer Lulu’s $1.43 Billion Abu Dhabi IPO Sells Out in an Hour

Lulu Retail Holdings Plc had demand for all shares in its 5.27 billion dirhams ($1.43 billion) initial public offering an hour after books opened on the deal.

Demand for the listing exceeded the number of shares on offer, according to terms of the deal seen by Bloomberg News. The IPO is set to be the United Arab Emirates’ biggest listing of the year, eclipsing oil services firm NMDC Energy’s $877 million share offering.

The hypermarket chain operator had set a price range of 1.94 dirhams to 2.04 dirhams per share, according to a statement earlier on Monday. The top end implies a market capitalization of 21.1 billion dirhams. 

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

Institutional investors including Abu Dhabi Pension Fund, Bahrain Mumtalakat Holding Company Co. B.S.C., Emirates International Investment Company LLC, and Oman Investment Authority have agreed to subscribe for shares worth about 753 million dirhams. 

The Middle East has seen a flurry of new share sales this year, which have raised just shy of $8 billion — with the UAE accounting for around 30% — despite the conflict in the region. LuLu’s IPO would also be the biggest private sector listing in the region in 2024 — and there are more in the pipeline. Delivery Hero SE’s Middle Eastern unit Talabat and IT services firm Alpha Data are preparing to list in the UAE before year end.

High-end supermarket chain Spinneys 1961 Holding Plc had raised $374 million from a Dubai listing in May. But the stock had a relatively muted debut, and its shares now trade below the offer price.

Lulu 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 officer told Bloomberg News. 

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.