Lulu Retail Holdings, a major operator of hypermarkets in the Middle East, raised $1.72 billion last month in an initial public offering (IPO) that was more than 25 times oversubscribed and the largest listing in the United Arab Emirates (UAE) this year. The company sold approximately 3 billion ordinary shares, representing 30% of issued share capital.
The offering attracted global investors, including Vanguard and Singapore’s GIC Private Ltd. Retail investors scrambled to secure an allocation, resulting in an outsized $37 billion demand: the highest level of oversubscription for a non-government IPO in the UAE in the last decade. Final share price was AED2.04 (about 56 cents).
The Lulu Retail shares saw a muted response when they debuted on Abu Dhabi’s ADX bourse. Investors are likely more cautious in response to instability in the region and the recent perfor-mance of other regional IPOs. On the first day of trading under the ticker symbol LULU, the stock fell to AED1.99 per share, down 2.5% from its offer price.
Established in the UAE in 1974 by Indian tycoon Yusuff Ali, Lulu’s IPO follows similar retail offerings by UAE-based Spinneys and Saudi Arabia’s Bin Dawood as investors seek exposure to a consumer spending boom in the Persian Gulf states. The subdued response may be due to investors prioritizing fundamentals over speculative gains, says George Pavel, general manager at Naga.com Middle East, a social trading app. “The Abu Dhabi stock market has recently seen limited performances and an unclear direction,” says Pavel, adding that regional developments in addition to weaker oil prices may continue to weigh on investor confidence.
Previous listings, including Dubai Electricity and Water Authority and Abu Dhabi’s Borouge, a petrochemical firm, have struggled to move above their IPO levels, despite an initial surge in price. According to PwC, Gulf Cooperation Council stock exchanges have underperformed compared to their counterparts in Europe, the US, and Asia. Companies in the region raised close to $5 billion in the first nine months of 2024, compared to more than $10.5 billion for all of 2023, PwC reported.
