Top Gulf grocer Lulu seeks up to $1.43 billion in Abu Dhabi IPO

A logo sits on display above a Lulu hypermarket, operated by Lulu Group International, during the coronavirus lockdown in Dubai, United Arab Emirates, on Thursday, April 23, 2020. An investment firm backed by a member of Abu Dhabi’s royal family agreed to buy a stake worth just over $1 billion in LuLu Group International, which runs one of the Middle East’s largest hypermarket chains, according to people familiar with the matter. Photographer: Christopher Pike/Bloomberg

Lulu Retail Holdings Plc is looking to raise as much as 5.27 billion dirhams ($1.43 billion) from its initial public offering, in what’s set to be the United Arab Emirates’ biggest listing of the year.

The hypermarket chain operator has set a price range of 1.94 dirhams to 2.04 dirhams per share, according to a statement on Monday. The top end of the price range 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 escalating conflict in the region. The Lulu sale would eclipse the $877 million share offering from oil services firm NMDC Group, which is so far the country’s biggest IPO this year.

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.