Lulu supermarket chain to sell 25% stake in upcoming IPO

Lulu Retail Holdings, a major hypermarket chain in the United Arab Emirates, announced plans to sell a 25% stake in its upcoming initial public offering (IPO), scheduled from October 28 to November 5.

The IPO will offer more than 2.582 billion shares and is expected to begin trading on the Abu Dhabi Securities Exchange on November 14. This move aligns with a retail spending boom in the GCC, spurring domestic listings, including grocery chains like Spinneys and BinDawood Holding.

Founded in 1974 by Indian businessman Yusuff Ali, Lulu currently operates over 240 stores across six GCC countries. CEO Saifee Rupawala expressed confidence in the company’s growth potential, citing a $100-billion retail market opportunity in the GCC over the next five years.

He highlighted that Lulu’s business in Saudi Arabia is primed for further expansion.

The company's strong financials bolster its IPO appeal. Lulu's first-half revenue for 2023 reached $3.9 billion, a 5.6% increase year-over-year, contributing to full-year revenue projections of $7.3 billion, up 5.6%.

Core earnings rose 7.2% in 2023, reaching $753 million, driven by sales from existing stores, new locations, and growth in online channels. Lulu plans to maintain a dividend payout ratio of 75% of annual distributable profits, paid twice a year.

Lulu's IPO is part of a wider trend in the region's retail sector, with firms like Saudi Arabia's Panda Retail and Tamimi Markets preparing for public listings. The move reflects the region's dynamic retail environment and growing investor interest in consumer-focused companies.