Lulu Retail Holdings, which runs one of the Middle East’s biggest hypermarket chains, kicked off an initial public offering on Monday that bankers say could be the UAE’s largest this year.
The offering by the conglomerate that runs more than 240 stores in the six countries belonging to the GCC comes during a retail spending boom in the region that is spurring 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, which are expected to start trading on the Abu Dhabi Securities Exchange on Nov. 14, Lulu’s IPO document showed.
Two sources involved in the transaction said the offering could raise between $1.7 billion-$1.8 billion for the 25% stake. Lulu declined to comment on the value of the deal.
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.
Lulu said in the IPO document that 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 in 2023 rose 5.6% to $7.3 billion.
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. Annual core earnings in 2023 rose 7.2% to $753 million.
Lulu Group is the largest full-line retailer with stores in all GCC countries by selling space, sales and number of stores in 2023. The Group was the second-largest grocery retailer in UAE and largest in Oman, Qatar, Bahrain, and Kuwait and the fastest-growing and largest pan-GCC retailer in Saudi Arabia, according to market consultants. It currently has a strong omni-channel presence in the form of 3 formats – hypermarkets, express stores and mini-markets.
By August 2024, the group operated 240 stores, comprising 116 hypermarkets, 102 express stores and 22 mini markets with 103 stores located in the UAE, 56 in Saudi Arabia and 81 across other markets.
The group’s total selling space as of December 31, 2023, was approximately 1.3 million square metres, which was around 3 times higher than the average selling space of its listed peers in the GCC. The retailer, on average, served over 600,000 daily shoppers every day in 2023. Sourcing products from 85 countries, it operates a network of 21 distribution centres in the GCC to support its retail operations.
Yusuffali MA, founder, chairman of Lulu Retail, said the firm, which was founded in 1974, has exceeded its own expectations as it operates more than 240 stores across six GCC countries.
“Integral to our growth is the vision and ambition of GCC nations where strong national leadership is enabling positive demographic and consumption trends and driving impressive economic growth. We’re looking forward to welcoming new shareholders to Lulu and are sure they will share our passion for the company and excitement for the future,” he said.
“Lulu is a brand synonymous with retail in the GCC and we’re incredibly proud to announce the launch our IPO today. Over the past 50 years, we have grown from one store in Abu Dhabi to the largest pan-GCC retailer by market share and the fastest-growing player of scale in Saudi Arabia. Every day, Lulu serves more than 600,000 shoppers, enabled by our unmatched international sourcing network across 85 countries, ensuring we are deeply rooted in all GCC markets and able to offer over 200,000 active SKUs, catering to all our customers’ diverse needs,” he added.
It plans to pay a dividend for the six months ending on December 31 in the first half of 2025.
The company posted $7.27 billion (Dh26.7 billion) revenues in 2023, up from $6.89 billion in the previous year.
