Lulu Retail Holdings shares fall on debut after $1.72 bn Abu Dhabi IPO

By Laura Gardner Cuesta  Lulu Retail Holdings Plc’s shares fell after its $1.72 billion initial public offering, a rarity in the Middle East where listings have typically offered stellar returns in early trading. 

The hypermarket chain operator fell to as much as 1.99 dirhams ($0.54) per share in its Abu Dhabi trading debut, down 2.5 per cent from the offer price of 2.04 dirhams.

 

The muted debut comes two weeks after Oman’s OQ Exploration & Production dropped 8 per cent in its debut after a record $2 billion offering.  

 

Lulu - the United Arab Emirates’ largest IPO of the year — had demand for all shares an hour after books opened last month. Its owners subsequently boosted the size of the deal to offer a 30 per cent stake from 25 per cent earlier. 

 

The share sale drew sovereign wealth funds including Saudi Arabia’s Public Investment Fund and Singapore’s GIC Pte, over and above commitments worth over 1 billion dirhams from cornerstone investors. 

 

The share sale that overtook oil services firm NMDC Energy’s $877 million offering as the UAE’s biggest IPO of the year, comes amid a boom in listings in the region that’s seen firms raise around $10 billion this year. 

 

A slew of Middle Eastern private sector firms are eyeing listings, as local economies look to diversify away from oil.

 

High-end supermarket chain Spinneys 1961 Holding Plc raised $374 million from its Dubai IPO in May, and Delivery Hero SE’s Middle Eastern unit Talabat plans to list this year, in a deal that could value it higher than its parent. 

 

Billionaire founder

 

Lulu’s share sale boosted founder Yusuff Ali’s net worth to $7.1 billion, cementing his position as the UAE’s second-richest private individual, according to the Bloomberg Billionaires Index. 

 

India-born Ali arrived in the UAE in 1973 and opened his first grocery store a year later. Lulu has since grown into one of the Middle East’s largest hypermarket chains and reported a profit of $192 million last year. It serves over half a million shoppers a day from 240 stores in six countries across the Gulf, and employs more than 50,000 people.

 

Ali turns 69 on Friday, a day after Lulu’s trading debut.

 

Abu Dhabi Commercial Bank PJSC, Citigroup Inc., Emirates NBD Capital and HSBC Holdings Plc acted as joint global coordinators on Lulu’s offering. Moelis & Co. was an advisor on the deal.