Another Dubai IPO: Spinneys’ public float ‘could help bring other IPOs to fruition’

Spinneys, an operator of 75 grocery retail supermarkets in the UAE and Oman, announced plans to proceed with an initial public offering (IPO) and list its ordinary shares on the Dubai Financial Market (DFM).

In a statement released on Tuesday, it said 900,000,000 shares each with a nominal value of AED 0.01 will be made available in the offering, representing 25% of the company’s total issued share capital.

The company operates under the ‘Spinneys’, ‘Waitrose’ and ‘Al Fair’ brands and has plans to open in Saudi Arabia later this year, where it sees immense potential for its business, focusing on stores in Jeddah and Riyadh.

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“The IPO could help the company grow further and expand its operations in addition to putting its brand forward in the process, giving it more visibility among investors and potential customers as it seeks to start operating in Saudi Arabia,” said George Khoury, Global Head of Education and Research at CFI Financial Group.

Speaking about the impact on the health of the Dubai economy, he told Business Recorder: “The company’s listing and its growth could have a positive impact and could help bring other IPOs to fruition, boosting activity on the stock market.”

He added that Dubai has seen a series of successful IPOs during the last few years which showcased the health of its economy, strength of its companies, and the appetite of investors for such opportunities.

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Meanwhile, Mazen Salhab, Chief Market Strategist MENA at BDSwiss, said the IPO “represents the positive outlook in Dubai’s economy and consumers’ behavior that remained solid.”

“The retail business sector is one of the main sectors that Dubai relies on and it was very clear that such an IPO will not be the last one,” he told Business Recorder.

“We are expecting further IPOs in the midterm that benefit from the strong growth outlook in UAE that exceeds 5% in 2024 , and the influx of capital and expat to the country,” he added.

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The IPO comes against the backdrop of Dubai’s plans to boost the size of its financial market by listing 10 state-owned companies, out of which six have already gone public.

In an interview with Investment Monitor in January 2024, John Wilkinson, head of emerging markets equity capital markets and managing director at Goldman Sachs, noted that “the push to list companies was meant to stimulate participation from UAE-based private companies, family-owned businesses, and potentially private equity-owned businesses.”

It was recently reported that companies in Dubai raised $9.4 billion through selling shares on the Dubai bourse in the past three years, amid strong investor interest. Aggregate investor demand for those listings reached more than Dh1 trillion, according to the Dubai Securities and Exchange Higher Committee.

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Looking to the future, Wilkinson had predicted that “over the next 12 to 18 months, there will be a broadening of the supply and diversification of the types of businesses that come to market beyond the initial IPO boom that came from the government.”

Meanwhile, Salhab had earlier said that “the beginning of 2024 seems promising. Our expectation is that we’re going to have more IPOs in 2024, mainly in the first half, and then if the interest rate goes lower in the second half of this year, then we may have more.”

He had also noted that Dubai in particular and the UAE in general are “working on diversification of the economy” with plans to increase the market value of the Dubai Financial Market up to AED 3 trillion in just a few years.

Details of the IPO

The subscription period for the Spinneys IPO will open on April 23 and end on April 29 for UAE retail investors and on April 30 for professional investors.

The Offer Price will be determined through a book-building process while admission of shares to trading on DFM is expected to take place in May 2024.

Rothschild & Co Middle East Limited has been appointed as Independent Financial Adviser while Emirates NBD Capital PSC has been appointed as Listing Adviser.

The company commanded a 27% share of its target market in Dubai and 12% share of its AED 23 billion target market in the UAE in 2022.

Revenue in 2023 grew to AED 2.87 billion at a CAGR of 8.2% from 2019, driven by increasing online penetration, increasing private label penetration, successful navigation of inflation through strategic pricing, and an expanding store footprint in the UAE, according to the company.

Profit in 2023 stood at AED 254 million, up 18.7% from 2022.

“Our IPO represents an opportunity for investors to be part of our next stage of growth and we are excited to embark on a new chapter, bringing our fresh opportunity to a wider shareholder base,” said Ali Saeed Juma Al Bwardy, founder and chairman.

Meanwhile, CEO Sunil Kumar, who began his professional career at Spinneys 30 years ago, said “ours is a brand with huge ambition, positioned to flourish in the GCC’s most attractive and fast-growing markets.”

Spinneys has plans to introduce “The Kitchen, by Spinneys”, a dining concept, and “Spinneys Swift”, a hyperlocal e-commerce platform, later this year.

The group also plans to commission a new production facility in 2027 in the Dubai Food Tech Valley, in line with the UAE’s National Food Security Strategy.

Copyright Business Recorder, 2024