UAE-based Lulu Retail, the largest pan-GCC retailer by selling space, sales and number of stores in 2023, has announced its intention to float 25 per cent stake in an initial public offering.
The Group will offer more than 2.582 billion shares, with the IPO process starting 28 October and closing on 5 November. Trading is expected to start on the Abu Dhabi Securities Exchange (ADX) on 14 November.
The price range will be announced on 28 October, but the offering could raise between $1.7 billion and $1.8 billion. Lulu declined Reuters’ request to comment on the deal’s value. The shares will have a nominal value of Dh0.051 ($0.014). The final offer price will be determined through a book-building process.
Lulu operates retail stores in the UAE, the KSA, Oman, Qatar, Kuwait, and Bahrain. It has a network of 240 stores, including 116 Hypermarkets, 102 Express Stores, and 22 Mini Markets. With 103 stores in the UAE, 56 in the KSA, and 81 stores across the other markets, Lulu attracts over 600,000 customers daily.
According to its filing with the ADX, the Group’s first-half revenue for 2024 of $3.9 billion was up 5.6 per cent on the year, while full-year revenue in 2023 rose 5.6 per cent to $7.3 billion.
Spinneys, one of Lulu’s competitors in the region, raised $375 million through its listing on the Dubai Financial Market (DFM) in May this year.
Yusuff Ali MA, Chairman – Lulu Retail, commented: “I am delighted to announce Lulu’s listing on the Abu Dhabi Securities Exchange, the latest milestone in our exciting growth journey.
“As we cement our position as the largest pan-GCC retailer, with 240 stores across three formats, we are proud and excited to invite new shareholders to share in the Lulu journey. We are committed to growing our diverse store network, enhancing our existing stores and providing more products our customers love, while rewarding loyal customers.
“Driven by investments in our digital capability, unmatched global sourcing capability, our private label product line and customer loyalty, Lulu is delivering consistent top and bottom-line growth.
“With regional macroeconomic and demographic tailwinds behind us, we believe now is a perfect time to bring Lulu to market and further enable our ambitious growth plans.”
Ali, who hails from India, founded Lulu in 1974.
Saifee Rupawala, Chief Executive Officer of Lulu Retail, added: “Lulu is a brand synonymous with retail in the GCC and we’re incredibly proud to 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 the Kingdom of Saudi Arabia. Every day, Lulu serves more than 600,000 shoppers, enabled by our unmatched international sourcing network across 85 countries.
“Our scale is combined with a track record of delivering robust revenue growth, attractive profit margins and a well-defined growth strategy built around enhancing and delivering greater value from our existing stores, expanding our store network, delivering operational efficiencies and growing our high-value private label and loyalty programs.
“With GCC retail presenting a $100 billion market opportunity over the next five years and our business in the Kingdom of Saudi Arabia primed for further growth, we are confident that Lulu will continue to be where the world comes to shop.”
Future plans and dividend policy
The company will aim to maintain a total dividend payout ratio of 75 per cent of annual distributable profits after tax, paid semi-annually. It targets that a dividend for the six months ended 31 December 2024 will be paid in the first half of 2025.
Lulu said it plans to continue to drive its strong like-for-like sales growth by offering appealing and diverse products, including private label products, and by continuously monitoring, refreshing and expanding its product assortment to cater to changing customer preferences.
In the filing, it said that “it is well positioned to increase its market share and grow its store network, with a primary focus on the KSA and UAE. In other markets, the Group plans to grow by selectively opening stores and maintaining its market share and leadership positions”.
Lulu is gradually shifting towards an asset-light model for its new stores, which will help ensure lower capital spending requirements and faster rollouts.
It believes in the significant growth potential of the grocery retail market in Saudi Arabia, with Euromonitor suggesting the market size will reach $48 billion by 2028. Lulu said it sees potential to expand its footprint in over 20 cities with populations over 200 thousand, along with avenues to open multiple stores in cities with populations of 1 million or more.
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