Spinneys, the UAE and Oman’s premium supermarket operator intends to go public with an initial public offering on the Dubai Financial Market, joining the regional IPO surge.
It announced on Tuesday its plans to sell 900 million shares, representing 25% of the company’s issued share capital, through the upcoming IPO.
The selling shareholder, Al Seer Group, exclusively holds all shares available in the public float and retains the right to adjust the offering size.
The IPO will be accessible for subscription by UAE investors in the retail tranche of the deal, with institutional investors also eligible to subscribe as part of the qualified investors’ offering.
The subscription period for retail investors will commence on April 23 and extend until the end of April 29, while for professional investors, it will conclude on April 30.
“This is the right time to invite investors to participate in our future growth,” said Sunil Kumar, Spinneys’ chief executive.
“This listing will provide us an added strategic flexibility for our ambitious plan going forward, it will attract a wider spectrum of shareholders from diversified portfolios and we will have access to the capital market to achieve our ambitious plan.”
The UAE and Saudi Arabia offer the high-end supermarket chain “white-space opportunities, considering the macroeconomic growth in this region”, he added.
The final offer price for the IPO will be determined through a book-building process and Spinneys shares are expected to begin trading on the DFM in May.
Spinneys expects robust demand from regional and international investors based on discussions in which the company outlined its future growth plans and expected dividend payout, Mr Kumar said.
“What we’ve seen from our interactions with investors in the last six months is everyone is very positive about the business model,” he said.
“The investors have high confidence in the business because it is going to be listed with our growth story as well as a dividend pipeline.”
Investors also express confidence in the stock markets of the UAE and the broader GCC region, citing robust macroeconomic growth and the impressive performance of recent listings on regional exchanges.
Spinneys holds a significant market share, with 27 per cent in Dubai and 12 per cent in the Dh23 billion market in the UAE in 2022.
Ongoing expansion in online sales, the popularity of its private label brands, and the appeal of its fresh food offerings fuel this growth.
“It is an enormous opportunity for us [to grow further],” said Mr Kumar, who began his career at Spinneys 30 years ago.
Capitalizing on Dubai’s Economic Momentum
Spinneys’ decision to float shares marks the latest move among issuers seeking to raise capital through listings, capitalizing on the ongoing economic momentum in Dubai.
Over the past three years, companies in Dubai have collectively raised Dh34.5 billion ($9.4 billion) through share sales, with investor demand for these listings surpassing Dh1 trillion, as reported by the Dubai Securities and Exchange Higher Committee in March.
The sustained IPO activity during this period has contributed to the robust growth of the Dubai bourse, propelling its general index to rank as the fifth-best performer globally last year, according to the committee’s statement.
In November 2021, Dubai announced plans to list 10 state-owned companies and establish a Dh2 billion market maker fund to incentivize listings from private enterprises operating in sectors like energy, logistics, and retail.
With the government aiming to expand the emirate’s financial market size to Dh3 trillion, six state-owned enterprises have debuted on the Dubai Financial Market (DFM) since 2022.
Last month, parking operator Parkin’s IPO, the first in the UAE capital markets for the year, raised Dh1.57 billion from investors. The deal garnered record demand, totalling Dh259 billion.
Strategic Expansion into Saudi Arabia and Prospects in the UAE
Spinneys, renowned for its premium grocery retail supermarkets carrying its own brand alongside Waitrose and Al Fair in the UAE and Oman, is poised to embark on expanding into Saudi Arabia.
Mr. Kumar stated that the company plans to open its initial store in the kingdom in the first half of the year, followed by three additional openings by year-end.
With plans to establish two to four new stores annually in Saudi Arabia over the next five years, contingent upon property availability, Spinneys aims to tap into the region’s burgeoning market.
In the UAE, the company envisions substantial growth prospects, particularly through its forthcoming venture, Kitchen by Spinneys, which will offer a diverse array of ethnic food options. Spinneys has scheduled the launch of the inaugural concept store in Dubai Mall during the first half of this year.
Spinneys is strategically targeting the affluent populations of Saudi Arabia and the UAE for future growth endeavours.
It is notable that 42 per cent of Spinneys’ revenue derives from its private label brands. Mr Kumar highlighted that while the company intends to finance its expansion plans through internal cash flow, it anticipates that the IPO will provide additional access to capital for potential mergers and acquisitions.
However, he clarified that there are currently no immediate plans for such transactions.
Navigating Challenges with Resilience
Despite the potential for increased instability, compounded by inflationary pressures and disruptions to maritime trade in the Red Sea, Spinneys’ supply chain and procurement have reportedly experienced a minimal impact, according to Mr Kumar.
The company’s portfolio encompasses 75 outlets spread across a gross leasable area of 1.3 million square feet, with 64 of these outlets owned by the group and the remainder operated under contractual arrangements.
Revenue surged to Dh2.87 billion last year, reflecting an annual growth rate of 8.2 per cent since 2019, driven by a higher online penetration and an expanding store presence in the UAE.
Rothschild & Co Middle East serves as the independent financial adviser for the IPO, while Emirates NBD Capital, Merrill Lynch, and HSBC Bank Middle East act as joint global coordinators and bookrunners.
