Will Spinneys' IPO set off a wave of UAE family businesses going public?

Privately-owned enterprises could be next big thing on UAE stock markets

Before the start of the year, many were expecting a slowdown to the IPO wave in the Gulf.

However, the stellar listing of Dubai’s Parkin IPO silenced doubters. The stock price is currently up by 33 per cent from its initial listing price of Dh2.10. All eyes are on the upcoming Spinneys IPO, a significant event that could potentially reshape the UAE stock market landscape.

Spinneys, owned by the Albwardy family, plans to sell a 25 per cent stake in its Spinneys 1961 Holdings plc, amounting to 900 million shares. This IPO is a unique opportunity, as it would be the only second offering by a family holding in the UAE. The previous listing was of Al Ansari Financial Services.

Spinneys currently has 75 stores, with a Dubai market share of 27 per cent, while online sales contribute 13 per cent to its revenues.

Expected issuance band

According to the latest financials, the company’s revenue in 2023 grew to Dh2.9 billion, with a CAGR of 8.2 per cent over the last five years. Profit stood at Dh254 million, 19 per cent higher than in 2022. At a global level, its closest peers are Carrefour, Marks & Spencer, Sainsbury and Tesco. The average P/E across the sector is in the 14.50 range.

Based on the IPO details provided and the enclosed financials, the company's total share capital stands at Dh36 million divided into 3,600,000,000 shares paid in full. Based on this, the probable EPS for the company stands in the range of Dh0.07–Dh0.09.

Approximating the global sectoral P/E of 14.5, the IPO pricing band will likely be above Dh1.25 to Dh1.30. (The numbers are approximate and represent a bare calculation based on the global sectoral average. The market valuation approach may differ with various sources and methodology used).

This listing and that from Lulu later this year will set the right tone for other private family-owned businesses to follow the IPO wave…

Vijay Valecha

The writer is Chief Investment Officer at Century Financial.