Lulu’s $2bn IPO all set to go; to be a Blockbuster issue

ABU DHABI: Even as the much-anticipated LuLu IPO becomes a major talking point across the GCC, many are betting that the retail giant’s public offering to raise about $2 billion will be a watershed event for the region.

With expectations of multiple oversubscriptions, the shares are set to be listed in both the UAE and Saudi Arabia, signaling robust demand and making it one of the most significant IPOs in the GCC to date.

Lulu group has been toying with the idea of selling a part of the company through a public offering of shares for the last couple of years, but somehow it couldn’t fructify, particularly due to the COVID that slowed down the whole business projects the world over.

In between, 20 per cent of the company was sold to ADQ grouo of Abu Dhabi for about $1 billion. The group also raised AED10 billion as loans last year whch was used to refinance existing loans.

OFS likely in Lulu IPO?

Though there has been no official mention of an Offer for Sale (OFS) component in LuLu Group’s upcoming IPO, sources from Abu Dhabi have told businessbenchmark.news that there is a strong likelihood of the public offering including an OFS portion.

Yusuff Ali M.A., the main promoter and managing director of LuLu Group, has ambitious expansion plans for India, which require substantial equity funding, despite the availability of bank finance.

Reports indicate that, in addition to developing malls across India, Yusuff Ali is also eyeing large-scale projects in the food processing industry. “The upcoming IPO presents a good opportunity for Yusuff Ali to raise funds by divesting a small stake through an OFS,” said a source familiar with the matter, who requested anonymity.

Spinneys IPO

Following the resounding success of Spinneys’ IPO, which was oversubscribed 19 times earlier this year, market experts predict LuLu’s listing will attract even greater investor interest.

With expectations to raise about $2billion, the LuLu Group IPO is set to be four to five times larger than the Spinneys offering.

The shares are likely to be listed on both the Abu Dhabi Securities Exchange (ADX) and Saudi Arabia’s Tadawul, making it one of the most anticipated retail listings in the region.

A source familiar with the matter stated, “The IPO is expected to open in the window between late October and early November, ideally before the holiday season sets in.

 “Given the scale of LuLu’s operations and its strong market presence, we anticipate substantial oversubscription, far surpassing previous listings, the source added.

Bookrunners

The IPO will be managed by Emirates NBD Capital, HSBC Holdings, Abu Dhabi Commercial Bank, and Citigroup, who have been tapped as bookrunners.

Founded by Yussuf Ali in the 1990s, LuLu Group operates 260 stores and 24 shopping malls across the GCC, Egypt, India, and the Far East.

20% sold in 2020

With an annual turnover of $8 billion in 2022, the group’s significant expansion plans, including the opening of 80 new hypermarkets, have been bolstered by ADQ’s 20 per cent stake acquisition in 2020.

In August 2023, LuLu Group raised AED10 billion to refinance debt and further enhance its footprint in key markets.

The company has emphasised its focus on strengthening supply chains and expanding e-commerce capabilities, adding to the appeal for institutional and retail investors alike.

With strong market fundamentals and the clear success of recent IPOs in the region, the LuLu Group’s offering is expected to draw robust interest, potentially marking one of the most successful listings in the Middle East this year.