Lulu’s Yusuff Ali hints at Saudi listing; UAE IPO to fund growth, refinance debt

Lulu Group Announces IPO on ADX, Hints at Future Saudi Listing for Long-Term Growth

A day after UAE retail giant Lulu Abu Dhabi announced its IPO plans, its chairman Yousuff Ali MA that a possible listing on the Saudi exchange Tadawul would happen “in the long term”.

Lulu Retail Holdings will sell 2.58 billion shares, 25% of its stake, through a three-phase IPO starting on October 28 and ending on November 5. The company will list its shares on the Abu Dhabi Securities Exchange (ADX) in November. 14. Informed that the company could raise $2 billion from the listing.

The Lulu chairman denied initial media reports of a dual Abu Dhabi and Saudi listing.

“We were always going ahead with a listing on the ADX first. This is our primary market. Lulu is an Abu Dhabi-based company and sovereign investor ADQ has a 20% stake in the company.

“In fact, we have never confirmed plans for a dual listing. We did a study of all the exchanges in the GCC and Abu Dhabi was the strongest. 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 fixed time frame for that,” he added.

GCC and India expansion

Proceeds from the IPO will allow Lulu Retail’s sole shareholder, Lulu International Holdings, to formulate a growth strategy that will include increasing the number of stores in the GCC from 240 to 270 by Q4 2025.

The company will also look at debt refinancing, which would involve raising capital of 10 billion UAE dirhams ($2.72 billion) in 2023.

We are currently looking to develop the brand in 33 cities across Saudi Arabia. Lulu Group Executive Director Ashraf Ali MA said that there are many developments going on in the UAE as well. “India is a strong focus for Lulu Holdings and expansion plans are being developed to capitalize on this.”

The focus is also on developing Lulu’s private label brand, which currently accounts for 29% of total sales.

Investor share

Ten percent of the IPO allocation has been earmarked for retail investors. Eligible employees can enjoy a higher allocation of 2,000 shares. As part of the Senior Executive Offering, the offer will also be made available to eligible senior executives of the Lulu Group.

Asked if Lulu Holdings would consider increasing its investor share based on demand, Lulu Retail CEO Saifi Rupawala said they have no such plans at the moment.

Emirates NBD Capital, HSBC Holdings, Abu Dhabi Commercial Bank and Citigroup are joint bookrunners, with Moelis & Company 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 accepting banks, with the latter retained as a listing advisor.

This will be the fourth IPO in Abu Dhabi this year after NMDC Energy and Alef Education Holding Plc raised $877 million. It has raised $515 million, and ADNH Catering is set to list shares on the ADX on Oct. 23.