Lulu shares drop on Abu Dhabi market after year’s biggest IPO
After electrifying investors across the Gulf who wrestled to buy its shares, mega-grocery chain Lulu Retail Holdings’ IPO landed today with a thud.
Touted as the UAE’s biggest initial stock sale this year, priced at the top of its marketed range and oversubscribed within an hour of its offering, Lulu fell as much as 2.5% in trading on the Abu Dhabi Securities Exchange. The IPO looked like such a sure bet that Lulu boosted the size of the offering to 30% from its initial plan for a 25% sale.
Lulu’s slow start comes weeks after a $2 billion energy-sector IPO by Oman’s OQ Exploration & Production dropped 8% in its debut, Bloomberg reports. Dubai-based supermarket chain Spinneys, which raised $374 million in May, also had an undramatic debut and continues to trade around the offer price. Both those deals were oversubscribed too.
The Middle East is in the midst of an IPO boom that’s seen firms raise around $10 billion this year. Coming soon is an initial share sale from Talabat, the Middle East unit of Berlin-based Delivery Hero, that could reach a value higher than its parent.
Since its founding in 1973, Lulu has grown into one of the Middle East’s largest hypermarket chains and reported a profit of $192 million last year. It serves over half a million shoppers a day from 240 stores in six countries across the Gulf, and employs more than 50,000 people.
The IPO boosted India-born founder Yusuff Ali’s net worth to $7.1 billion, cementing his position as the UAE’s second-richest private individual, according to the Bloomberg Billionaires Index.