Abu Dhabi: Lulu Retail Holdings, a prominent entity managing one of the Middle East's largest hypermarket chains, commenced its initial public offering (IPO) on Monday, with financial analysts anticipating it to be the largest in the United Arab Emirates for the year.
This offering by the conglomerate, which operates over 240 stores across six countries within the Gulf Cooperation Council (GCC) region, occurs amidst a period of significant retail spending growth in the area, leading to an increase in domestic listings by sector-related companies.
The IPO, scheduled to span from October 28 to November 5, is set to issue more than 2.582 billion shares, with trading expected to commence on November 14, according to the IPO document.
Sources involved in the transaction have estimated that the offering could yield between $1.7 billion and $1.8 billion for the 25% stake. Lulu Retail Holdings has not disclosed the valuation of the transaction.
Established in 1974 by Indian businessman Yusuff Ali, Lulu Retail Holdings is among the grocery firms that have embarked on the IPO journey this year, including UAE-based Spinneys and Saudi grocery retailer BinDawood Holding in 2020.
In its IPO document, Lulu Retail Holdings outlined its objectives to maintain a dividend payout ratio of 75% of its annual distributable profits after tax, with dividends to be paid out bi-annually, contingent upon certain criteria. The company reported a total revenue of $3.9 billion for the first half of the year, marking a 5.6% increase from the previous year, and an anticipated full-year revenue of $7.3 billion, a 5.6% growth from the previous year.
The increase in revenue was primarily attributed to sales growth from existing stores, the expansion of the group's store network, and the growth of its online presence. Core earnings for the first half of 2024 reached $391 million, a 4.3% increase from the previous year, with annual core earnings for 2023 projected to rise by 7.2% to $753 million.
Lulu Group stands as the premier full-line retailer, boasting stores across all GCC countries, with a notable expansion in store numbers and sales by 2023. The conglomerate has secured its position as the second-largest grocery retailer in the UAE, reigning supreme in Oman, Qatar, Bahrain, and Kuwait. Furthermore, it has emerged as the fastest-growing and largest retailer across the GCC, according to market analysts.
Presently, Lulu Group maintains a robust omni-channel presence, characterized by three distinct formats: hypermarkets, express stores, and mini-markets. By August 2024, the conglomerate had successfully operated a total of 240 stores, which included 116 hypermarkets, 102 express stores, and 22 mini-markets. These stores are strategically located across the UAE, Saudi Arabia, and other markets, demonstrating the conglomerate's comprehensive reach.
As of December 31, 2023, Lulu Group's total selling space amounted to approximately 1.3 million square meters, marking a significant increase of around three times the average selling space of its listed GCC peers. The retailer has also been instrumental in serving over 600,000 daily shoppers in 2023, a testament to its popularity and customer base. With a sourcing network spanning 85 countries, Lulu Group operates 21 distribution centers within the GCC to bolster its retail operations.
Founder and Chairman of Lulu Retail, Yusuffali MA, expressed his satisfaction with the conglomerate's achievements, noting that it has surpassed its initial expectations by operating more than 240 stores across six GCC countries. He highlighted the pivotal role of the vision and ambition of GCC nations, characterized by strong national leadership, positive demographic trends, and robust economic growth, in fueling the conglomerate's expansion.
"Integral to our growth is the vision and ambition of GCC nations where strong national leadership is enabling positive demographic and consumption trends and driving impressive economic growth. We’re looking forward to welcoming new shareholders to Lulu and are confident that they will share our passion for the company and our excitement for the future," he stated.
Lulu Group is a brand synonymous with retail in the GCC, and the company is immensely proud to announce the launch of its Initial Public Offering (IPO). Over the past 50 years, Lulu Group has evolved from a single store in Abu Dhabi to the largest pan-GCC retailer by market share and the fastest-growing scale player in Saudi Arabia. The conglomerate serves over 600,000 shoppers daily, facilitated by its unparalleled international sourcing network across 85 countries. This network ensures Lulu Group's deep-rooted presence in all GCC markets and its ability to offer over 200,000 active SKUs, catering to the diverse needs of its customers.
The conglomerate has announced its intention to distribute dividends for the six-month period ending on December 31, 2025, in the first half of the year. In 2023, Lulu Group reported revenues of $7.27 billion, marking a significant increase from the previous year's $6.89 billion.
