The anticipated share sale by the retail behemoth Lulu Group, scheduled for next week, is poised to be another monumental IPO, continuing the pattern of robust oversubscription witnessed in previous public offerings post-pandemic. The earlier IPOs on the Dubai and Abu Dhabi stock exchanges garnered immense interest from both retail and institutional investors, prompting some to augment the funds they aimed to raise through the share sale.
Notable examples include utility services provider Dewa, which was oversubscribed 37 times, Salik 49 times, Parkin 165 times, Borouge 45 times, and others. Lulu Retail Holdings’ IPO will span from October 28 to November 5, offering a 25 percent stake in three tranches. This could potentially be the UAE’s largest IPO this year, driven by the robust growth of the retail sector and a strong dividend policy, among other factors. The final offer price is expected to be competitively set, drawing a broader investor base.
Joseph Dahrieh, managing principal at Tickmill, anticipates significant interest and oversubscription in the Lulu IPO, which aims to raise approximately $2 billion. “Investor demand could exceed the available shares several times over, with estimates suggesting oversubscription levels akin to, or even surpassing, recent high-profile IPOs in the region. Lulu’s market presence, investor confidence, and the sheer scale of the listing could bolster strong demand, making it one of the most awaited IPOs in the GCC,” Dahrieh noted.
Vijay Valecha, chief investment officer at Century Financial, foresees a robust response to the Lulu IPO from both retail and institutional investors in the UAE, with expected oversubscription. “Founded in 1974, LuLu Group has evolved into a household name in the UAE, with approximately 240 stores across six countries. According to Global Media Insight, the UAE’s population of 10.17 million includes a substantial portion from India, Pakistan, Bangladesh, and the Philippines, forming the primary customer base for Lulu. Given the promising growth prospects in the UAE, this demographic is expected to expand, and with LuLu recognized as the most affordable retailer in the country, it is well-positioned for growth, supporting the case for its IPO,” Valecha explained.
“Additionally, the company plans to distribute 75 percent of its annual distributable profits after tax as dividends, paid out semi-annually. In 2023, LuLu reported earnings of approximately $753 million, reflecting a year-over-year increase of about 7.2 percent. Consequently, investors and institutions seeking stable dividends may also find the IPO appealing,” he added.
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