Lulu Group Set to Go Public with $1.8 Billion IPO on Abu Dhabi Securities Exchange

Lulu Retail Holdings, a leading pan-Gulf Cooperation Council (GCC) retailer, has announced a landmark move to go public with a $1.8 billion Initial Public Offering (IPO) on the Abu Dhabi Securities Exchange (ADX). The IPO will see the company list 25% of its shares, representing 2.58 billion ordinary shares, making it one of the most anticipated public offerings in the Middle East’s retail sector.

This major development positions Lulu Retail Holdings, which operates over 240 hypermarkets across six GCC countries, to strengthen its presence in the region. The IPO, to be launched by Lulu International Holdings Limited—the sole shareholder of Lulu Retail—will open for subscription on October 28, 2024, and close on November 5, 2024. Trading is expected to commence around November 14, 2024, with the final offer price determined through a book-building process.

Strong Market Presence and Future Plans

Yusuff Ali M.A., Founder and Chairman of Lulu Retail, highlighted the significance of the IPO:
“We’re bringing to market the largest pan-GCC full-line retailer,” he said, emphasizing the company’s remarkable growth since its inception in 1974. Over the past five decades, Lulu has expanded its footprint to operate in major GCC countries, serving 600,000 shoppers daily from 130 nationalities.

As part of the IPO, the company aims to attract a diverse group of investors. UAE retail investors, professional investors, senior executives, and eligible employees will have the opportunity to participate in the offering.

Lulu Group also plans to maintain an attractive dividend payout ratio of 75% of annual distributable profits, with the first dividend payment for the second half of 2024 expected in early 2025.

Dominance in the GCC Market

Lulu Retail Holdings enjoys a commanding 13.5% share of the modern offline grocery market in the GCC as of 2023, ranking it as the second-largest grocery retailer in the UAE. It holds market leadership positions in Oman, Qatar, Bahrain, and Kuwait and has rapidly gained ground in Saudi Arabia, emerging as one of the fastest-growing retailers in the Kingdom.

The company’s extensive operations are supported by a well-established infrastructure that includes 19 global sourcing offices, 21 distribution centers spanning 430,000 square meters, and a fleet of 1,400 vehicles. Lulu Retail’s digital presence is enhanced by its e-commerce platform, complemented by partnerships with major online marketplaces like Amazon and Talabat.

Innovations and Future Growth Strategy

Lulu Retail continues to innovate and expand its digital and customer engagement initiatives. In March 2023, the company launched the “Happiness Programme,” a loyalty scheme that attracted approximately 2.4 million members as of August 2024. Additionally, the company has introduced self-checkout technology in over 70 stores, demonstrating its commitment to improving customer experience.

Yusuff Ali M.A. has also hinted at further expansion into new markets while focusing on maintaining its leadership in the GCC. The IPO proceeds will help the company strengthen its operational capabilities and bolster its growth in both the physical and online retail spaces.

Consortium of Banks Managing IPO

The Lulu IPO will be managed by a consortium of top-tier banks, with Abu Dhabi Commercial Bank and First Abu Dhabi Bank acting as joint lead receiving banks. They are supported by Emirates NBD Capital, HSBC Bank Middle East, and EFG Hermes UAE, which will serve as joint lead managers for the offering.

With the IPO, Lulu Retail is set to further enhance its role in the GCC's retail landscape while offering investors a unique opportunity to tap into one of the region's fastest-growing sectors.

Conclusion:

Lulu Retail Holdings' decision to launch a $1.8 billion IPO on the Abu Dhabi Securities Exchange marks a significant milestone not only for the company but also for the broader GCC retail sector. With its vast network of stores, cutting-edge technology, and strong market presence across multiple countries, Lulu is poised to continue its growth trajectory. The IPO presents a unique opportunity for investors to tap into one of the region’s most dominant retail giants, supported by a strong dividend policy and a clear commitment to innovation. As the company expands its digital and physical footprint, Lulu’s influence in the retail market is set to grow further, solidifying its position as a market leader in the GCC.