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Grocer Lulu’s $1.72 Billion Abu Dhabi IPO Draws Vanguard, GIC

A logo sits on display above a Lulu hypermarket, operated by Lulu Group International, during the coronavirus lockdown in Dubai, United Arab Emirates, on Thursday, April 23, 2020. An investment firm backed by a member of Abu Dhabi’s royal family agreed to buy a stake worth just over $1 billion in LuLu Group International, which runs one of the Middle East’s largest hypermarket chains, according to people familiar with the matter. (Christopher Pike/Bloomberg)

(Bloomberg) -- Hypermarket chain operator Lulu Retail Holdings Plc’s $1.72 billion Abu Dhabi initial public offering drew orders worth $37 billion, including from global investors Vanguard Group Inc. and Singapore sovereign wealth fund GIC Pte.

Lulu International Holdings sold 3.10 billion shares, or a 30% stake, at 2.04 dirhams ($0.56) apiece, the top of a marketed range. Based on that offer price, the firm will have a market capitalization of 21.1 billion dirhams when it lists on Nov. 14.

Apart from Vanguard and GIC, sovereign entities from Gulf Cooperation Council countries — including Saudi Arabia’s Public Investment Fund and Hassana, Qatar Investment Authority and Kuwait Investment Authority — invested in the offer, founder Yusuff Ali said at a press conference in Abu Dhabi Wednesday.

Lulu previously said it had secured commitments from Saudi Arabia’s Masarrah Investment Co., Abu Dhabi Pension Fund, Bahrain Mumtalakat Holding, Emirates International Investment Co., and Oman Investment Authority. Those funds bought shares worth just over 1 billion dirhams. 

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The retailer initially planned to sell a 25% stake and raise up to $1.43 billion, but increased the size of the IPO, citing strong investor interest. The deal had demand for all shares an hour after books opened last week, eclipsing oil services firm NMDC Energy’s $877 million offering as United Arab Emirates’ biggest IPO of the year. 

The IPO marks the latest in a series of private sector listings across the Middle East, offering investors a broader choice beyond state-owned assets. Delivery Hero SE’s Middle Eastern unit Talabat and IT services firm Alpha Data are also planning listings in the UAE this year.

High-end supermarket chain Spinneys 1961 Holding Plc raised $374 million from a Dubai listing in May, though the stock had a relatively muted debut and continues to trade around the offer price. 

Lulu 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 offering. Moelis & Co. is an advisor on the deal.

(Updates with founder’s comments)

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