LUCKIN EYES US$800M
It aims to displace Starbucks as China’s largest coffee chain
LUCKIN Coffee Inc, the Chinese challenger to Starbucks Corp, filed for an initial public offering (IPO) in the United States on Monday through which, sources said, it is looking to raise up to US$800 million (RM3.3 billion).
The Beijing-based coffee chain set a placeholder amount of US$100 million to indicate the size of the IPO and did not disclose the number of shares it would offer, a filing with the US Securities and Exchange Commission showed.
Two sources said the startup was potentially looking to raise between US$500 million and
US$800 million from the listing, which was scheduled to take place next month.
An amount raised in that range would make Luckin the biggest US IPO by a Chinese firm so far this year, Refinitiv data showed.
Another source said the lossmaking company was aiming for a valuation of between US$4 billion to US$5 billion, a significant jump from US$2.9 billion following the US$150 million it raised last week.
Luckin Coffee, which has been expanding at breakneck speed, currently operates 2,370 stores in 28 Chinese cities and plans to open 2,500 new stores this year with the goal of displacing Starbucks as China’s largest coffee chain in the process.
The brand is banking on an increase in coffee consumption in China which, according to a report cited by Luckin in the prospectus, has almost doubled to 8.7 billion cups last year from 4.4 billion in 2013 and is expected to further rise to 15.5 billion cups by 2023.
However, the company is still making losses and has warned that it could continue to incur losses in the foreseeable future.
Since inception on June 16, 2017, the company has been in the red, with net loss to shareholders at US$475.4 million last year, and total revenue of US$125.27 million, the filing showed.