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Spinneys IPO – like selling one-dirham steaks

The grocery store is a Dubai institution – but are its shares too cheap?

Spinneys Dubai IPO Alamy via Reuters
Under Emirati ownership since 1999, the Spinneys chain has 75 stores in the UAE and Oman

There was a bit of a scrum in my local Spinneys in Dubai Marina yesterday.

The store was offering prime Australian rib-eye at one dirham a kilo, and the feeding frenzy among bargain-hunting shoppers was intense.

So intense that the store quickly sold out – there was only a limited stock – and an informal secondary market developed in the car park where lucky punters could make a big profit on the steaks they had just purchased.

Ok, that never happened in reality, but it’s an allegory for the Spinneys IPO that recently closed. The group’s share offering, worth $375m, attracted $19bn worth of demand, suggesting there were not enough shares on offer, or the price was too low, or both. 

I have to point out this is in no way a criticism of Spinneys. I would not dare to attack an institution that is such an integral part of the Dubai way of life. In fact, I love Spinneys.

Its history is intertwined with that of the Middle East. Arthur Rawdon Spinney, a British soldier in the Staffordshire Yeomanry, went into business in Egypt after the First World War, supplying the railways in then-mandated Palestine.

In troubled times, Spinney moved his HQ from Alexandria to Haifa and then to Baghdad, before finally settling in Dubai in 1961 a decade before UAE independence. Under Emirati ownership since 1999, the chain now has 75 stores in the UAE and Oman under the Spinneys, Waitrose (a franchise) and the little-known Al Fair brands.

I visit my local store at least once a day. I get friendly nods of welcome from the manager and the staff, who are always helpful and knowledgeable.

In the peak Covid months, Spinneys was a kind of ark, where masked shoppers could gather to gingerly swap tales of hardship and endurance, and offer survival tips. It kept the community together.

Visiting family and friends from London are bowled over by the variety of stuff on offer. “I wish we had a Spinneys in Ladbroke Grove”, they say.

I love its quirkiness too: the display of exotic fruits that just magically appears at the entrance one morning, with Vietnamese red dragon fruit competing alongside Mahachanok mango from Thailand in a presentation worthy of the Chelsea Flower Show.

The store prides itself on its sourcing of local produce, and I’m regularly sent with a shopping list that says “UAE potatoes – NOT American” or an order for delicious instore-baked almond croissants.

I am sure you could live quite happily for a fortnight on the delights of the Spinneys Kitchen fresh food counter without ever having the same meal twice.

The IPO prospectus also emphasised the flexibility of its “powerful vertically integrated supply chain”, which means it can react quickly to changing consumer demand patterns.

Within weeks of the Russian invasion of Ukraine in February 2022, the store had laid on shelves of pickled cucumbers and strange-looking sausages to cater for the exiles fleeing the war. This is Marinagrad, after all.

In the peak Covid months, Spinneys was a kind of ark, where masked shoppers could gather to swap tales of endurance and offer survival tips

I may quibble with a few marketing decisions. Why, for example, has Spinneys – to the best of my knowledge – never stocked Heinz cream of chicken soup? The full Heinz soup range is available, it seems, but not chicken.

Maybe the manufacturers slipped some pork into the recipe? But this childhood comfort-food of mine isn’t available in the “non-Muslim” section either.

The other gripe is with the anarchic news section. Copies of the Harvard Business Review sit beside Barbie magazine, and newspapers are just dumped in piles, all mixed together.

One Saturday I looked as usual for the Financial Times Weekend, to find that last week’s edition was still on sale, seven days old. I asked the concerned manager If he would keep fruit and veg on sale for a week.

“No sir, of course not. But this is forever,” he replied, pointing to the newspaper. Either he knows nothing about news cycles, or he has a deep understanding of the FT’s enduring value.

But those are minor moans, which I’d love to take up one day with the CEO, Sunil Kumar, who has done three decades at the company, working his way up from humble store manager.

I’d also ask him about the IPO pricing. The rationale I got from an adviser was that the shares were priced at the top of the indicative range of values, and that the price-earnings ratio was among the highest of all recent Dubai IPOs. So not cheap at all.

Maybe, but 64 times oversubscription suggests a miscalculation somewhere.

I guess we’ll find out on May 9, when Spinneys shares begin trading on the DFM. I fully expect them to sell like one-dirham Australian rib-eye steaks.

Frank Kane is Editor-at-Large of AGBI and an award-winning business journalist. He acts as a consultant to the Ministry of Energy of Saudi Arabia and is a media adviser to First Abu Dhabi Bank of the UAE

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