Luckin Coffee Inc (瑞幸咖啡), an ambitious start-up that is challenging Starbucks Corp in the race to dominate China’s growing coffee culture, is seeking to raise as much as US$510 million in its US initial public offering (IPO).
The Xiamen-based company said in a filing on Monday that it is planning to sell 30 million US depositary shares for US$15 to US$17 each.
At that range, it would be the sixth-largest of the 53 IPOs on US exchanges so far this year, according to data compiled by Bloomberg.
Photo: Bloomberg
It would also top the company’s earlier plan for a US$300 million share sale described previously by people familiar with the matter.
Including a private placement for about US$50 million with Louis Dreyfus Co, Luckin would have a value of as much as US$4 billion at US$17 a share based on the shares to be outstanding after the listing, according to the filing.
Luckin is spending millions of US dollars a year opening outlets to unseat Starbucks as China’s top coffee company. Since its inception in June 2017, Luckin has quickly expanded into 2,370 stores in 28 cities, with backing from investors including Singapore sovereign wealth fund GIC Pte and China International Capital Corp (中國國際金融).
By the end of this year, Luckin aims to become the largest coffee network in China in terms of number of stores.
It faces an uphill battle against Starbucks, which entered China 20 years ago and dominates with more than half of the market last year, according to Euromonitor.
Luckin held only a 2.1 percent share last year. Starbucks has more than 3,700 outlets in the country and is also expanding at break-neck speed, opening a new store about every 15 hours. It is aiming to have 6,000 sites in China by 2023.
Chasing the entrenched rival has been costly. Luckin said it is burning through US$130 million a year and might continue to see losses in the future.
The company reported a net loss of US$241 million for last year, on total revenue of US$125 million. It lost US$82 million on revenue of US$71 million during the first quarter.
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