Lulu Retail Holdings, a major operator of supermarkets in the Middle East, raised $1.72 billion last month in an initial public offering that was more than 25 times oversubscribed and the largest listing in the UAE this year. The company sold approximately 3 billion common shares, representing 30% of the issued share capital.
The offering attracted global investors, including Vanguard and Singapore’s GIC Private Ltd. Retail investors rushed to secure the allotment, resulting in a massive $37 billion order: the highest level of subscription for a non-government IPO in the UAE in the past decade. The final price per share was 2.04 UAE dirhams (about 56 cents).
Lulu Retail shares witnessed a weak response when they debuted on the Abu Dhabi Securities Exchange. Investors are likely to be more cautious in responding to instability in the region and the recent performance of other regional IPOs. On the first day of trading under the stock symbol LULU, the stock fell to AED 1.99 per share, a 2.5% decrease from the offer price.
Founded in the UAE in 1974 by Indian businessman Yusuf Ali, Lulu’s IPO comes on the heels of similar retail offerings by UAE-based Spinneys and Saudi Arabia-based Bin Dawood as investors seek exposure to a consumer spending boom. In the Arab Gulf countries. The weak response may be due to investors prioritizing fundamentals over speculative gains, says George Pavel, managing director at Naga.com Middle East, a social trading app. “The Abu Dhabi stock market has recently witnessed limited performance and an unclear trend,” says Pavel, adding that regional developments as well as lower oil prices may continue to impact investor confidence.
Previous listings, including Dubai Electricity and Water Authority and Abu Dhabi’s Borouge Petrochemicals Company, have struggled to exceed IPO levels, despite the initial rise in prices. According to PricewaterhouseCoopers, stock markets in the GCC countries have underperformed their counterparts in Europe, the United States and Asia. PwC reported that companies in the region raised nearly $5 billion in the first nine months of 2024, compared to more than $10.5 billion for all of 2023.
