Spinneys, the operator of premium supermarkets in the UAE and Oman, plans to list its shares through an initial public offering on the Dubai Financial Market as it seeks to tap into "enormous opportunities" to boost its UAE presence and expand into Saudi Arabia.
Spinneys will sell 900 million shares, or 25 per cent of the company's issued share capital, through the IPO, it said on Tuesday.
All shares being offered in the public float are held by Al Seer Group as the selling shareholder. It reserves the right to amend the size of the offering.
The IPO will be open for subscription for UAE investors as part of the retail tranche of the deal. Institutional investors will also be able to subscribe as part of the qualified investors’ offering.
The subscription period for retail investors will commence on April 23 through to the end of April 29. For professional investors, it will conclude on April 30.
"This is the right time to invite investors to participate in our future growth," Sunil Kumar, Spinneys' chief executive, told The National.
"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 are also confident in the UAE and wider GCC's stock markets, the region's solid macroeconomic growth and the strong performance of recent listings in regional bourses, he added.
Spinneys has a 27 per cent share in its target market in Dubai and 12 per cent of the Dh23 billion target market in the UAE in 2022 amid continued growth in its online sales, its private label brands and its fresh food offerings.
"It is an enormous opportunity for us [to grow further]," said Mr Kumar, who began his career at Spinneys 30 years ago.
The intention to float shares by Spinneys is the latest among issuers lining up to raise funds through listing amid the continued economic momentum in Dubai.
Companies in Dubai raised Dh34.5 billion ($9.4 billion) through selling shares in the past three years, with aggregate investor demand for those listings reaching more than Dh1 trillion, the Dubai Securities and Exchange Higher Committee said in March.
The continued IPO activity in that period has helped the Dubai bourse to maintain robust growth that pushed its general index to become the fifth-best performer globally last year, the committee said.
In November 2021, Dubai said it would list 10 state-owned companies and establish a Dh2 billion market maker fund to encourage listings from private companies in sectors such as energy, logistics and retail.
The government aims to expand the size of the emirate's financial market to Dh3 trillion and six state-owned enterprises have listed on the DFM since 2022.
Parking operator Parkin's IPO last month, the first in the UAE capital markets this year, raised Dh1.57 billion from investors. Demand for the deal hit a record Dh259 billion.
Expansion plans
Spinneys, which operates premium grocery retail supermarkets under its own brand as well as Waitrose and Al Fair in the UAE and Oman, plans to expand into Saudi Arabia, the biggest Arab economy, this year.
Spinneys will open its first shop in the kingdom in the first half of this year, with three more to follow by the end of the year, Mr Kumar said.
The company plans on expanding at the rate of two to four new stores annually in Saudi Arabia for the next five years, depending on the availability of property, he said.
In the UAE, Spinneys sees a "wide range of growth potential".
It will establish Kitchen by Spinneys that will provide ethnic food options, with the first concept store to open in Dubai Mall in the first half of this year, he said.
The company is betting on Saudi Arabia and the UAE’s affluent residents for growth opportunities. A total of 42 per cent of Spinneys' revenue is generated from private label brands.
While it will use its own cash flow to fund these growth plans, the IPO will help the company gain access to capital in case of future opportunities for mergers and acquisitions, Mr Kumar said.
However, there are no immediate plans for such deals, he added.
Navigating regional challenges
Spinneys' IPO announcement comes amid the possibility of rising regional geopolitical tensions after Iran launched an attack on Israel at the weekend.
But the escalating tensions, coupled with inflationary pressures and the Red Sea shipping attacks that have snarled maritime trade, have had "minimal impact" on the company's supply chain and procurement, Mr Kumar said.
Its portfolio comprises 75 outlets across a gross leasable area of 1.3 million square feet, 64 of which are owned by the group, while the rest are run under an operations arrangement.
Revenue last year expanded to Dh2.87 billion at an annual growth rate of 8.2 per cent from 2019, driven by an increased online penetration and expanding store footprint in the UAE.
Rothschild & Co Middle East is the independent financial adviser on the deal, while Emirates NBD Capital, Merrill Lynch and HSBC Bank Middle East are joint global co-ordinators and bookrunners.
COMPANY%20PROFILE
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Mercer, the investment consulting arm of US services company Marsh & McLennan, expects its wealth division to at least double its assets under management (AUM) in the Middle East as wealth in the region continues to grow despite economic headwinds, a company official said.
Mercer Wealth, which globally has $160 billion in AUM, plans to boost its AUM in the region to $2-$3bn in the next 2-3 years from the present $1bn, said Yasir AbuShaban, a Dubai-based principal with Mercer Wealth.
“Within the next two to three years, we are looking at reaching $2 to $3 billion as a conservative estimate and we do see an opportunity to do so,” said Mr AbuShaban.
Mercer does not directly make investments, but allocates clients’ money they have discretion to, to professional asset managers. They also provide advice to clients.
“We have buying power. We can negotiate on their (client’s) behalf with asset managers to provide them lower fees than they otherwise would have to get on their own,” he added.
Mercer Wealth’s clients include sovereign wealth funds, family offices, and insurance companies among others.
From its office in Dubai, Mercer also looks after Africa, India and Turkey, where they also see opportunity for growth.
Wealth creation in Middle East and Africa (MEA) grew 8.5 per cent to $8.1 trillion last year from $7.5tn in 2015, higher than last year’s global average of 6 per cent and the second-highest growth in a region after Asia-Pacific which grew 9.9 per cent, according to consultancy Boston Consulting Group (BCG). In the region, where wealth grew just 1.9 per cent in 2015 compared with 2014, a pickup in oil prices has helped in wealth generation.
BCG is forecasting MEA wealth will rise to $12tn by 2021, growing at an annual average of 8 per cent.
Drivers of wealth generation in the region will be split evenly between new wealth creation and growth of performance of existing assets, according to BCG.
Another general trend in the region is clients’ looking for a comprehensive approach to investing, according to Mr AbuShaban.
“Institutional investors or some of the families are seeing a slowdown in the available capital they have to invest and in that sense they are looking at optimizing the way they manage their portfolios and making sure they are not investing haphazardly and different parts of their investment are working together,” said Mr AbuShaban.
Some clients also have a higher appetite for risk, given the low interest-rate environment that does not provide enough yield for some institutional investors. These clients are keen to invest in illiquid assets, such as private equity and infrastructure.
“What we have seen is a desire for higher returns in what has been a low-return environment specifically in various fixed income or bonds,” he said.
“In this environment, we have seen a de facto increase in the risk that clients are taking in things like illiquid investments, private equity investments, infrastructure and private debt, those kind of investments were higher illiquidity results in incrementally higher returns.”
The Abu Dhabi Investment Authority, one of the largest sovereign wealth funds, said in its 2016 report that has gradually increased its exposure in direct private equity and private credit transactions, mainly in Asian markets and especially in China and India. The authority’s private equity department focused on structured equities owing to “their defensive characteristics.”
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LA LIGA FIXTURES
Friday Valladolid v Osasuna (Kick-off midnight UAE)
Saturday Valencia v Athletic Bilbao (5pm), Getafe v Sevilla (7.15pm), Huesca v Alaves (9.30pm), Real Madrid v Atletico Madrid (midnight)
Sunday Real Sociedad v Eibar (5pm), Real Betis v Villarreal (7.15pm), Elche v Granada (9.30pm), Barcelona v Levante (midnight)
Monday Celta Vigo v Cadiz (midnight)
Anghami
Started: December 2011
Co-founders: Elie Habib, Eddy Maroun
Based: Beirut and Dubai
Sector: Entertainment
Size: 85 employees
Stage: Series C
Investors: MEVP, du, Mobily, MBC, Samena Capital
Some of Darwish's last words
"They see their tomorrows slipping out of their reach. And though it seems to them that everything outside this reality is heaven, yet they do not want to go to that heaven. They stay, because they are afflicted with hope." - Mahmoud Darwish, to attendees of the Palestine Festival of Literature, 2008
His life in brief: Born in a village near Galilee, he lived in exile for most of his life and started writing poetry after high school. He was arrested several times by Israel for what were deemed to be inciteful poems. Most of his work focused on the love and yearning for his homeland, and he was regarded the Palestinian poet of resistance. Over the course of his life, he published more than 30 poetry collections and books of prose, with his work translated into more than 20 languages. Many of his poems were set to music by Arab composers, most significantly Marcel Khalife. Darwish died on August 9, 2008 after undergoing heart surgery in the United States. He was later buried in Ramallah where a shrine was erected in his honour.
Company profile
Name: Back to Games and Boardgame Space
Started: Back to Games (2015); Boardgame Space (Mark Azzam became co-founder in 2017)
Founder: Back to Games (Mr Azzam); Boardgame Space (Mr Azzam and Feras Al Bastaki)
Based: Dubai and Abu Dhabi
Industry: Back to Games (retail); Boardgame Space (wholesale and distribution)
Funding: Back to Games: self-funded by Mr Azzam with Dh1.3 million; Mr Azzam invested Dh250,000 in Boardgame Space
Growth: Back to Games: from 300 products in 2015 to 7,000 in 2019; Boardgame Space: from 34 games in 2017 to 3,500 in 2019
UAE currency: the story behind the money in your pockets
Living in...
This article is part of a guide on where to live in the UAE. Our reporters will profile some of the country’s most desirable districts, provide an estimate of rental prices and introduce you to some of the residents who call each area home.
MATCH INFO
Manchester City 4 (Gundogan 8' (P), Bernardo Silva 19', Jesus 72', 75')
Fulham 0
Red cards: Tim Ream (Fulham)
Man of the Match: Gabriel Jesus (Manchester City)
The specs
Engine: 77.4kW all-wheel-drive dual motor
Power: 320bhp
Torque: 605Nm
Transmission: Single-speed automatic
Price: From Dh219,000
On sale: Now
