Food store Kibsons says IPO could be on the table

Vijay Valecha, Special to the Arabian Gulf Business Insight  Oct 18, 2023

Kibsons, the family-owned food delivery company in the UAE, has said a potential listing of the business is “absolutely” on the table.

Launched in 2016, it processes over 35,000 orders a week. And founder and CEO Halima Jumani says they are on target to hit $100 million in turnover this year

Jumani, who co-owns the business with her husband Jamal Hussain, its managing director, said they are looking to expand further into the UAE, while other GCC countries are also options, including Saudi Arabia, Qatar, Kuwait and Egypt.

“An IPO could be one way for us to raise the capital,” she said. “It depends on how much of the company we open up to the IPO.”

A growing number of regional food retail businesses are choosing to go public.

Americana Restaurants, the frozen-food seller and Middle East and North Africa franchisee of fast food restaurants KFC and Pizza Hut, debuted in a dual listing in Abu Dhabi and Riyadh last December.

Supermarket chain Spinneys Dubai announced last month that it is planning an IPO on the Dubai Financial Market (DFM) next year.

Retail conglomerate Lulu Group International has also expressed an intention to IPO in the first half of 2024.

The UAE’s online grocery delivery market is estimated to be growing at an annual rate of 29 percent. It will be worth almost $7 billion by 2032, according to a report by SPER Market Research.

Vijay Valecha, chief investment officer at Century Financial.said the food and physical retail sector has become “overcrowded”

“The evolving trends point to the fact that for most of the major online food retailers, the competition is intense,” he said.

Jumani admitted that a listing would be more favourable than pursuing a merger or acquisition.

“We are not looking to bring capital in for the sake of capital alone,” she said.

Mena entities were involved in 318 new M&A deals in the first six months of 2023. That is down 14 percent year on year although the combined sales value declined only 0.4 percent to just under $44 billion, research from consultants EY found.

Kibsons has struck up partnerships with UK food retailers Sainsbury’s and Marks and Spencer and is currently in the middle of launching its latest tie-up with Ireland’s Super Value.

The latest S&P Global Dubai Purchasing Managers Index for September shows that business activity and confidence in the emirate’s non-oil sector have returned to pre-pandemic levels, and retail in particular has enjoyed growth.

Jumani admitted that navigating the current economic context – marked by heightened volatility in terms of trade stemming from Russia’s invasion of Ukraine, further conflict in the Middle East, a worldwide surge in interest rates, currency depreciations and inflationary pressures – is tricky.

She revealed that interest costs alone have more than doubled, while import charges are up by at least 15 percent.

“The costs in the international markets are rising and that’s affecting our suppliers,” she said.

Kibsons, which employs over 1,500 people and has a fleet of more than 200 vehicles, has also seen the price of talent and payroll increase by 15 percent, Jumani said.

Source:

Arabian Gulf Business Insight