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A day after UAE retail giant Lulu announced Abu Dhabi IPO plans, its chairman, Yusuff Ali MA, told Zawya that a possible listing on Tadawul, the Saudi exchange, could happen in the “long-term”.
Lulu Retail Holdings will sell 2.58 billion shares, representing 25% of its stake through a three-tranche IPO that will start on October 28 and close on November 5. The company will list its shares on the Abu Dhabi Securities Exchange (ADX) on November 14. Informed sources told Zawya the company could raise as much as $2 billion from the listing.
Initial media reports were of a dual Abu Dhabi and Saudi listing, which Lulu’s Chairman denied.
“We were always going to move ahead with a listing on the ADX first. This is our primary market. Lulu is an Abu Dhabi-based company, and sovereign investor ADQ owns a 20% stake in the company.”
“In fact, we have never confirmed plans for a dual listing. We had done a study of all exchanges in the GCC, and Abu Dhabi was the strongest. That said, Saudi Arabia is a very important market for Lulu, and we may consider a listing there as part of our long-term strategy. But there is no set timeline for that,” he added.
GCC, India expansion
Proceeds raised from the IPO will allow Lulu International Holdings, the sole shareholder in Lulu Retail, to map out a growth strategy, which includes increasing the number of stores in the GCC from 240 to 270 by Q4 2025.
The company will also look at refinancing its debt, which includes a 10 billion UAE dirhams ($2.72 billion) capital raise in 2023.
“We are currently looking at developing the brand across 33 cities across Saudi Arabia. There is also a lot of development happening in the UAE as well,” said Ashraf Ali MA, Lulu Group Executive Director. “India is also a strong focus for LuLu Holding and there are expansion plans being developed to capitalise on this.”
Developing Lulu’s private label brand, which currently makes up for 29% of total sales, is also a focus.
Investor allocation
Ten percent of the IPO allocation has been reserved for retail investors. Eligible employees could enjoy a higher minimum allocation of 2,000 shares. The offering will also be made available to eligible senior executives of Lulu Group as part of the Senior Executives Offering.
When asked whether Lulu Holdings would consider increasing investor allocation, based on demand, Lulu Retail CEO Saifee Rupawala said they had no such plans at this time.
Emirates NBD Capital, HSBC Holdings, Abu Dhabi Commercial Bank and Citigroup are joint bookrunners, with Moelis & Co. retained as Financial Advisors.
Abu Dhabi Commercial Bank, Emirates NBD Capital, First Abu Dhabi Bank, HSBC Bank Middle East and EFG Hermes are joint lead managers. FAB and ADCB are the joint lead receiving banks, and the latter also retained as a listing advisor.
This will potentially be the fourth IPO in Abu Dhabi this year, following NMDC Energy, which raised $877 million, Alef Education Holding Plc. which raised $515 million, and ADNH Catering, which is set to list its shares on ADX on 23 October.
(Reporting by Bindu Rai, editing by Seban Scaria)
