Lulu's Abu Dhabi IPO set to price at top, raising $1.43 billion

The IPO is set to be the UAE's biggest listing of the year

Lulu Retail Holdings Plc's Abu Dhabi initial public offering is likely to price at the top end of a planned range and raise $1.43 billion, making it the UAE's biggest listing of the year.

The deal is expected to price at 2.04 dirhams ($0.56) a share, according to terms of the deal seen by Bloomberg News. That's the top end of a range that started at 1.94 dirhams, and implies a market capitalization for the grocer of 21.1 billion dirhams.

The firm had demand for all shares on offer an hour after books opened on the deal last week, Bloomberg News has reported. The IPO is set to be the UAE's biggest listing of the year, eclipsing oil services firm NMDC Energy's $877 million share offering.

Lulu International Holdings plans to sell 2.58 billion shares or a 25 per cent stake in the firm. Final pricing is expected on Nov. 6, and the shares are scheduled to begin trading on Nov. 14.

The firm operates one of the Middle East's largest hypermarket chains. It reported a profit of $192 million last year, and aims to maintain a dividend payout ratio of 75 per cent. Its net profit margins are expected to reach 5 per cent over the medium term, up from 2.6 per cent in 2023, its chief executive officer told Bloomberg News.

The company - founded by Indian entrepreneur Yusuff Ali - plans to open about 90 stores across the Gulf over the next five years, with Saudi Arabia and the UAE slated as its main expansion markets.

Abu Dhabi Commercial Bank PJSC, Citigroup Inc., Emirates NBD Capital and HSBC Holdings Plc are the joint global coordinators on the sale. Moelis & Co. is an advisor on the deal.