Spinneys, LuLu’s IPOs to set right tone for other private family-owned businesses to follow suit, say analysts

Vijay Valecha, Arabian Business, April 26, 2024

The on-going initial public offer (IPO) of Spinneys, estimated at over AED 1.3 billion, along with the proposed Lulu’s IPO will set the right tone for other private family-owned businesses to follow suit, market experts said.

Spinneys’ IPO will be a unique opportunity for investors as it would be the only second offering by private family holdings, a rarity in the market, they said.

“Until now, most listings were from government utilities and private corporations,” Vijay Valecha, Chief Investment Officer at Century Financial, said.

The leading holding company, Al Seer Group LLC, plans to sell a 25 percent stake in its Spinneys 1961 Holdings plc firm, amounting to 900 million shares.

Spinneys currently have 75 stores, with an estimated 27 percent market share in Dubai. Online sales are estimated to account for 13 percent of the company’s revenues.

Mohamed Hashad, Chief Market Strategist, Noor Capital, also believed the Spinney’s IPO will offer a good opportunity for investors, considering the company’s impressive growth in 2023, with revenues reaching AED 2.87 billion, reflecting an 8.2 percent CAGR increase since 2019.

Hashad also pointed out that the Spinney’s CEO confirmed that there are “a lot of Saudi investors who are excited about the initial offering, as they believe that it may be a good opportunity for the Saudi market to obtain this base of customers who obtain food and beverages”.

Hani Abuagla, senior market analyst at XTB MENA, said in a note last week that the Spinneys IPO is expected to attract large-scale investor interest, reflecting confidence in Dubai’s economic prospects.

Market experts also said the UAE supermarket chain’s plans to list the company will help to deepen Dubai’s capital markets by improving liquidity and attracting more institutional investors, market experts said.

The company’s IPO move could also support the emirate’s efforts to diversify its economy, particularly in the retail sector, they said. Spinneys plans to sell 25 percent of its shares, amounting to 900 million stocks, in a Dubai IPO, which was opened for subscription on April 23.

The initial pricing band announced is AED 1.42 to AED 1.53/share.

While the final offer price will be determined through the book-building process announced on May 1st, Spinney’s is expected to raise AED 1.37 billion at the top end.

Spinneys currently operates its supermarket chain in the UAE and Oman, and is reportedly eyeing the Saudi Arabian market with immediate entry plans.

Source

Arabian Business