Middle East’s largest optical retailer isn’t ruling out an IPO as it expands into lens making
RIYADH: Magrabi Group, which operates the largest network of optical stores and hospitals in the Middle East, is open to a possible initial public offering as it plans to invest SR100 million ($26.63 million ) per year over the next few years to expand its operations, including opening a lens manufacturing plant in Dubai and possibly a similar plant in Riyadh.
The group’s CEO, Amin Magrabi, told Arab News in an exclusive interview that some of the group’s companies are very interested in the idea of selling shares to the public without revealing the exact timing of the IPO.
Speaking following the launch of its Lens Innovation Center, one of the most advanced facilities in the world and the largest manufacturer of ophthalmic lenses, Magrabi said that, from a valuation perspective, the market was very suitable for raising funds.
“We are still studying the optimal time to do so. Everyone knows from a valuation perspective that the market is currently hot and offers attractive valuations. For Magrabi Retail, I don’t see that happening in the next three years. But we are constantly reviewing it,” Magrabi said.
He added: “When I look to the future, I see that at some point we will tap into the capital markets, but not in the short term. We don’t have any concrete plan to tap into the capital markets.
But the company has already made tremendous progress. Its lens center in Dubai currently produces 1 million lenses a year and the company plans to manufacture 2 million by 2025.
The company partnered with Germany’s leading manufacturer of ophthalmic lens machinery and equipment, Schneider Optical, to develop the facility.
The center is the only lens manufacturing plant in the region that uses Schneider’s modulo line technology, allowing the center to operate at maximum levels of efficiency never seen in the Middle East before.
The benefits of the modulo production line are vast, reducing costs and improving overall efficiency and capacity to industry-leading levels.
Opening in January 2022, the LIC will serve Magrabi’s premium brand and the company’s consumer brand, Doctor M.
Saudi Arabia is our biggest market. Our investments will be dominated by Saudi Arabia. Riyadh is therefore an attractive market for us.
Amin Magrab, CEO of Magrabi Group
The company plans to manufacture a pair of lenses every 15 seconds by 2025, with the goal backed by an investment of 54 million dirhams ($14.7 million).
Rise of Saudi Arabia
During the interview, Magrabi noted that the company’s biggest market is Saudi Arabia and that it plans to increase its investments in the Kingdom over the next five years.
He further said that Magrabi plans to open a similar lens innovation center in Riyadh.
“Saudi Arabia is our biggest market. Our investments in the next five years will be dominated by Saudi Arabia. So Riyadh is an attractive market for us. And it is our biggest market and the one that is experiencing the fastest growing in the region,” he added.
Recently, Magrabi Group changed its headquarters from Jeddah to Riyadh, clearly showing the company’s interest in the Kingdom’s capital. It also leads the industry in terms of Saudiization.
“We are committed to employing, training, developing and promoting Saudi talent. I think we are ending this year with 70% Saudiization in our workforce in Saudi Arabia,” he added.
Magrabi added that the lens market is also slowly shifting to online sales mode, which will help customers buy lenses from the comfort of their homes.
“We first went online to Saudi Arabia and then to the United Arab Emirates. We will be going to the rest of the region over the next 12-18 months. You can now buy your contact lenses and sunglasses online. But still, to get the best quality measurements, you have to go to the store for the eye test and a perfect fit,” Magrabi added.
With a broad presence of 140 stores across the Kingdom, UAE, Egypt, Qatar and Kuwait, the group now plans to go premium over the next five years.
“We are trying to make it more premium. But we are relocating stores. We are expanding the stores and putting them in better positions.
But we don’t expect any significant growth in these numbers over the next five years. Maybe 20% growth on those numbers,” he continued.
“Magrabi wants to emerge more as a lifestyle brand and more as a luxury brand. You will therefore see massive investments in renovations, relocations and expansion of some of our existing stores. And this year alone, we will invest more than SR80-85 million to achieve this.
He also added that he doesn’t want to expand into international markets like regular players who just open up new stories in western cities.
“When we go to these markets, we’re not another player saying I have a few stores. We know many people who have done this.
So the day we go there, we want a meaningful presence there. We try to create truly differentiated organizations and business models so that when they expand internationally, they can have a significant impact on the markets they go to,” he said.
While talking about Magrabi’s social commitment, he noted that the group operates non-profit hospitals in countries like Egypt, Yemen and Sudan.
“We have non-profit hospitals in many countries in the Middle East which are less fortunate than the Gulf countries. We have consistently invested, donated and provided care to those in need,” he continued.
Magrabi added that the company plans to achieve gender equality in its workforce by 2025.
Speaking about the measures taken to protect the environment, he said: “We use optimal use of electricity and water in our facilities. Starting this year, we will also do audits to see where we rank and how we can improve these things.