Lulu Retail Holdings' Initial Public Offering (IPO) was fully subscribed within an hour of opening in the United Arab Emirates. The shares carried a price band of UAE dirham (AED) 1.94 to AED 2.04, approximately Rs 44.40 to Rs 46.69, each. The retailer, part of the MA Yusuff Ali-led Lulu Group, was expecting to raise $1.36 billion to $1.43 billion (Rs 11,424 crore – Rs 12,012 crore) through the IPO.
Earlier reports said the retailer would target raising $1.7 billion to $1.8 billion through the offering. Though the actual price was less than anticipated, the retailer's IPO was the year's biggest in the UAE. The record for the biggest IPO in the UAE this year was held by NMDC Energy, which raised $877 million.
Other overwhelmingly positive debuts were by Alef Education (May, $515 million), Parkin Co (February, $429 million), Spinneys (April, $375 million), and ADNH Catering (October, $235 million).
Lulu has now created the record for the UAE's biggest retailer and private firm IPO. It was estimated earlier that the Lulu Retail IPO would be oversubscribed (demand exceeding the number of shares on offer). Experts had also predicted the possibility of Lulu Retail's IPO getting oversubscribed within seconds of its opening. It has been expected that Lulu Retail IPO would be oversubscribed by more than 100 per cent.
Currently, Parkin holds the record for this year's most oversubscribed IPO, with demand reaching 165 per cent more than what was offered. Lulu Retail has plans to get listed on the Abu Dhabi Stock Exchange, where Spinneys and BinDawood Holding would be its major competitors.
Lulu floats 75% of shares Considering the IPO price band, Lulu Retail's market value has been estimated to be AED 20.04 billion to AED 21.07 billion. In Indian currency, its value would come up to Rs 48,231 crore ($5.46 billion - $5.74 billion).
Lulu Retail would float 25 per cent (2.58 billion shares) of its share capital through the IPO, lasting till November 5. Of the total shares floated, 89 per cent has been earmarked for Qualified Institutional Buyers (QIB), 10 per cent for retail investors, and 1 per cent for eligible employees.
Lock-in period
Abu Dhabi Pension Fund, Bahrain Mumtalakat Holding Company, Emirates International Investment Company, and Oman Investment Authority have already indicated that they would apply for Lulu Retail's shares. These companies have an IPO lock-in period of 180 days before they can sell the shares.
Meanwhile, a demand has been raised to increase the IPO share of retail investors. Lulu may soon decide on the demand.
Lower ceiling
Retail investors have a minimum ceiling to buy the shares. They must apply for shares worth AED 5,000 (approximately Rs 1.14 lakh). Later, they could apply for shares worth multiples of AED 1,000 (Rs 22,800).
Retail investors and QIBs would be allotted a minimum of 1,000 shares, while the lower ceiling for eligible employees is 2,000 shares each. The minimum spend for QIBs has been fixed at AED 5 million (Rs 11.44 crore).
The last date for retail investors and QIBs to apply for shares is November 5. The final pricing of the shares will be announced on November 6. Retail investors would receive an SMS on the allotment on November 12, and the refund would be disbursed on November 13. The shares of Lulu Retail will be listed on the Abu Dhabi Stock Exchange on November 14.
Dividend
The Lulu Group has been considering providing a dividend of 75 per cent of the profit after tax, twice a year. The dividend for six months ending on December 31 would be distributed in the first half of 2025. However, a final decision on the dividend would be subject to market conditions, retained earnings, and the opinion of the director board.
How to apply from India?
Those in India, too, could purchase the shares of Lulu Retail if the buyer has the National Investor Number (NIN) required to trade on the Abu Dhabi Stock Exchange. Additionally, the investor must have a bank account in the UAE or an international bank account. Indian rules will also apply to the share applicant.
Interested parties could approach any of the IPO's receiving banks to apply for the shares. Online and mobile banking facilities, too, would be available. The receiving banks are First Abu Dhabi Bank, Abu Dhabi Commercial Bank (ADCB), Dubai Islamic Bank, Emirates Islamic, Emirates NBD, and Mashreq.
