(Bloomberg) — Lulu Retail Holdings Plc’s shares fell after its $1.72 billion initial public offering in Abu Dhabi, marking the second instance of a muted debut for a large Middle Eastern listing in recent weeks.
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The hypermarket chain operator fell as much as 2.5% to 1.99 dirhams ($0.54) per share Thursday morning. The United Arab Emirates’ largest IPO of the year was priced at the top end of the marketed range.
The offer had demand for all shares an hour after books opened last month, and Lulu’s owners subsequently boosted the size of the deal to 30% from 25%.
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“More and more people start subscribing to the IPO by looking at over-subscription numbers floating around – expecting even lower allotment,” said Neetika Gupta, the head of research at Ubhar Capital. “However, it doesn’t really translate to secondary demand once the shares start trading.”
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Lulu’s muted start comes weeks after a $2 billion energy-sector IPO in Oman dropped 8% in its debut. High-end supermarket chain Spinneys 1961 Holding Plc, which raised $374 million in May, too had a quiet debut and continues to trade around the offer price. Both those deals too were oversubscribed.
The Middle East is in the midst of a listings boom that’s seen firms raise around $10 billion this year. And more are considering IPOs this year, including Delivery Hero SE’s Middle Eastern unit Talabat that’s lining up deal that could value it higher than its parent.
Billionaire Founder
Lulu’s share sale boosted 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.
India-born Ali arrived in the UAE in 1973 and opened his first grocery store a year later. Lulu has since 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.
Ali turns 69 on Friday, a day after Lulu’s trading debut.
