Lulu IPO: Retailer boosts size of offering to 30% on strong demand

Saudi Arabia's Masarrah Investment Company has joined as a cornerstone investor and will invest about Dh250 million

A Lulu shop at Al Wahada Mall. The additional 516,445,267 offer shares have been allocated to professional investors. Lauren Lancaster / The National

Lulu Retail has boosted the size of its initial public offering in Abu Dhabi to 30 per cent of its shares, up from 25 per cent, on strong demand and an additional cornerstone investor.

The total offering size has been increased to 3,098,671,605 ordinary shares, which are to be sold by the company’s sole shareholder, Lulu International Holdings, a statement on Monday said. The additional 516,445,267 shares have been allocated to professional investors.

The price range is unchanged at between Dh1.94 and Dh2.04 per share, with the company set to raise between Dh6.01 billion ($1.64 billion) and Dh6.32 billion. Based on the price range, Lulu Retail is set to list with a market capitalisation of Dh20.04 billion to Dh21.07 billion.

The IPO subscription period opened on October 28 and closes on November 5 for retail and professional investors.

The final offer price will be determined through a book-building process and is expected to be announced on November 6. The company expects to start trading on the Abu Dhabi Securities Exchange on November 14.

"The established pan-GCC presence of Lulu Retail and our clear strategy for growth has attracted a highly diverse investor base and we’re pleased to increase the total size of the offering to cater to the significant level of demand received from international, regional and local investors, and the inclusion of additional cornerstone investors to the IPO," said Saifee Rupawala, chief executive of Lulu Retail.

The Abu Dhabi Securities Exchange has attracted a flurry of listings. Victor Besa / The National

The new cornerstone investor is Saudi Arabia's Masarrah Investment Company, which joins Abu Dhabi Pension Fund, Bahrain's Mumtalakat, Emirates International Investment Company and the Oman Investment Authority.

Masarrah Investment Company has agreed to invest about Dh250 million and the aggregate commitments of all the cornerstone investors are about Dh1 billion, Lulu said.

Lulu Retail, which had 240 shops across the Gulf as of August, plans to open an additional eight this year in the UAE, Saudi Arabia and Oman. It has opened 13 shops in the Emirates so far this year and aims to add about 19 in 2025, mainly in the UAE and Saudi Arabia, officials said last month.

The Abu Dhabi-based company expects up to 10 per cent revenue growth this year, its chief financial officer Prasad KK told The National.

“The UAE is our main market and Saudi Arabia is our growth market. We are growing across the two markets,” he said at the time.

Lulu is targeting a total dividend payout ratio of 75 per cent of annual distributable profit after tax, paid every six months. The company aims to pay dividends for the six months ending on December 31 and in the first half of 2025.

The retailer's IPO is the latest in a string of listings across the UAE, driven by robust investor demand for new issues amid economic growth momentum in the country.

ADNH Catering, a unit of Abu Dhabi National Hotels, raised Dh864 million through the sale of a 40 per cent stake to the public after pricing its shares at the top of the indicated range last month. NMDC Energy, a unit of Abu Dhabi contractor National Marine Dredging Company, also began trading on the ADX in September after raising $877 million, while Alef Education raised $515 million from its IPO in Abu Dhabi in June.