Supermarket chain Lulu to offer 25% stake in Abu Dhabi listing

Lulu Retail Holdings of the United Arab Emirates plans to sell a 25% stake in its initial public offering, the firm that runs one of the Middle East's biggest hypermarket chains said on Monday.

The offering by the conglomerate that runs more than 240 stores in six countries of the Gulf Co-operation Council (GCC) comes during a retail spending boom in the region that is spurring more domestic listings by companies in the sector.

The listing, set to run from Oct. 28 to Nov. 5, will offer more than 2.582 billion shares, and is expected to start trading on the Abu Dhabi Securities Exchange on Nov. 14, Lulu's IPO document showed.

Founded in 1974 by Indian businessman Yusuff Ali, Lulu joins other grocery firms that have listed, such as UAE-based Spinneys this year, and Saudi grocery retailer BinDawood Holding in 2020.

"We are confident that Lulu will continue to be where the world comes to shop," Chief Executive Saifee Rupawala was quoted as saying, as he pointed to a $100-billion market opportunity presented by GCC retail over the next five years.

The firm's business in Saudi Arabia was also primed for further growth, he added.

In February, Saudi Arabia's Savola Group said it planned to list its grocer subsidiary Panda Retail, while the kingdom's wealth fund last year acquired a 30% stake in Tamimi Markets ahead of the supermarket chain's planned IPO.

In 2022, Reuters reported that Lulu was looking at an IPO and had hired investment bank Moelis & Co as an adviser.

Lulu said it aimed to maintain a total dividend payout ratio of 75% of annual distributable profits after tax, and to make the payout twice a year, subject to relevant parameters.

Its first-half revenue of $3.9 billion this year was up 5.6% on the year, while full-year revenue of $7.3 billion in 2023 was 5.6% on the year.

The annual increase in revenue was primarily driven by sales growth from existing stores and further expansion of the group’s store network, as well as growth from its online channel.

Core earnings in the first half of 2024 stood at $391 million, up 4.3% on the year. Core earnings for the whole of 2023 was $753 million, up 7.2% on the year.

Reuters