Lulu Retail has announced a strong demand for its upcoming initial public offering (IPO), which is set to open for subscription next week. “It is too early to predict oversubscription, as the process is still ongoing. However, there is a very strong demand, both internationally, regionally, and locally,” stated Saifee Rupawala, CEO of Lulu Retail.

On Monday, Lulu revealed plans to sell 25% of its shares through an IPO, with each share having a nominal value of Dh0.051. The company intends to sell over 2.582 billion shares through a three-tranche IPO, which will commence on October 28 and conclude on November 5. The final offer price will be disclosed in due course and the shares will be listed on the Abu Dhabi Securities Exchange.

Analysts predict that the Abu Dhabi-based retail giant’s IPO will likely see oversubscription similar to other recent public offerings on UAE bourses over the past three years. Many of these IPOs were oversubscribed by over 100 times, indicating a high level of market liquidity. Additionally, Lulu’s robust retail presence in the GCC makes it an attractive investment opportunity for potential subscribers.

The first tranche, reserved for individual subscribers and eligible employees, will offer 258.222 million shares, representing 10% of the offer. Each subscriber, excluding eligible employees, will be guaranteed a minimum allocation of 1,000 shares, while eligible employees will receive a minimum of 2,000 shares. The minimum application size for this tranche is Dh5,000, with additional applications required in increments of Dh1,000. There is no maximum application size for this tranche.

The second tranche, targeting institutional investors, will see Lulu Retail offloading 2,298,181,441 shares, accounting for 89% of the offer. The minimum application size for this tranche is Dh5 million, with no maximum limit.

The third tranche, reserved for senior executives, will offer over 25.822 million shares, representing 1% of the offer. The minimum application size for this tranche is Dh50,000, with additional applications required in increments of Dh1,000. There is no maximum application size for this tranche.

Regarding the use of IPO proceeds, Rupawala explained during a press briefing on Tuesday: “I have a robust expansion plan and strong cash flow, which is sufficient to support our future growth. With this cash flow, I can also pay dividends to my investors, amounting to about 75% of the net profit.”

Rupawala also mentioned that the primary listing will be on the ADX, with the possibility of a dual-listing in the long term. The company’s prospects indicate revenues of $7.27 billion (Dh26.7 billion) for 2023, up from $6.89 billion the previous year. “I aim for an 8 to 10% year-on-year growth in the short term over the next two years,” said Rupawala, highlighting that the GCC, particularly the UAE and Saudi Arabia, remain key markets for the retailer.

Rupawala emphasized that the company is focused on organic growth and is not considering acquisitions. Currently operating over 240 stores across the GCC, Lulu Retail aims to expand to up to 270 outlets across the region by the end of 2025.

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