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Lulu Retail said there is a strong demand for its initial public offering (IPO) which will open for subscription next week.
“It is too early to say about oversubscription. The process is ongoing… There is a very strong demand – be it internationally, regionally or locally,” said Saifee Rupawala, CEO of Lulu Retail.
On Monday, Lulu announced that it would sell 25 per cent shares through an IPO with a nominal value of Dh0.051 each.
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The company will sell over 2.582 billion (2,582,226,338) shares through a three-tranche IPO which will start on October 28 and close on November 5. The final offer price will be revealed in due course, and will be listed on the Abu Dhabi Securities Exchange.
Analysts also told Khaleej Times on Monday that the Abu Dhabi-based retail major’s IPO will see oversubscription similar to previous companies that went public on the UAE bourses during the past three years. Many of them were oversubscribed over 100 times, reflecting that there is plenty of liquidity in the market. In addition, Lulu’s strong retail presence in the GCC is also an attractive point for investors to subscribe to share sales.
Under the first tranche for individual subscribers and eligible employees, 258.222 million shares will be up for subscription, representing 10 per cent of the offer share. Each subscriber, other than eligible employees, will have a minimum guaranteed allocation of 1,000 shares and each eligible employee will have a minimum guaranteed allocation of 2,000 shares.
The minimum application size for first tranche subscribers is Dh5,000 with any additional application to be made in increments of Dh1,000. There is no maximum application size for this tranche.
Under the second tranche for institutional investors, Lulu Retail aims to offload 2,298,181,441 shares, representing 89 per cent of the off share.
The minimum application size for the second tranche subscribers is Dh5 million. There is no maximum application size in this Tranche.
Over 25.822 million shares will be sold through the third tranche for senior executives, representing one per cent of the offer share. The minimum application size for third tranche Subscribers is Dh50,000 with any additional application to be made in increments of Dh1,000. There is also no maximum application size for subscribers in this tranche
With regard to spending IPO proceeds, Rupawala explained in a press briefing on Tuesday: “I have a good expansion plan and have strong cash flow and that is enough to take care of our future growth. With cash flow, I can pay dividends to my investors also. It is about 75 per cent of the net profit which will be given as dividend."
Rupawala told Khaleej Times that the primary list will be ADX and the company could consider dual-listing in the long term.
The company’s prospects showed $7.27 billion (Dh26.7 billion) in revenues in 2023, up from $6.89 billion in the previous year.
“I have 8 to 10 per cent growth target year-on-year in short-term over the next 2 years,” said Rupawala, adding that GCC – especially UAE and Saudi Arabia – remain key markets for the retailer.
He elaborated that the company remains focused on organic growth and is not looking at acquisitions.
Currently operating more than 240 stores across the GCC, the retailer aims to reach up to 270 outlets across the region by the end of 2025.
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