| China

Luckin Coffee seeks to raise up to $800m in US IPO

Rapidly expanding Chinese coffee chain sets $100m placeholder with US Securities and Exchange Commission with the firm reportedly aiming for a $4-5bn valuation

Luckin Coffee currently operates 2,370 stores across 28 cities in China and is seeking to overtake Starbucks in 2019 | Photo: Andrew J. Cosgriff



Luckin Coffee is seeking to raise between $500-$800m from a US IPO scheduled to take place in May, according to a Reuters report, an offering that would make the convenience-focused coffee chain the largest US IPO by a Chinese firm so far in 2019. Luckin is also aiming to increase its $2.9bn valuation, reached after raising $150m in April 2019, to $4-5bn according to a separate unnamed source.
 
Since launching in January 2018, Luckin Coffee has expanded rapidly across China and currently operates 2,370 stores across 28 cities in the East Asian nation. The value-focused coffee chain’s rapid ascent is seen as a major challenge to Starbucks, which views China as a crucial market for its global growth strategy.
 
Starbucks currently operates a 3,600+ store portfolio in China, which is growing at a rate of one new store every 15 hours. In March 2019, the US coffee chain celebrated the opening of its 30,000th store globally in Shenzhen, China.
 
Luckin aims to open a further 2,500 stores in China during 2019, a goal that if reached would displace Starbucks as the country’s largest coffee chain. However, it is estimated nearly half of Luckin’s sites are effectively ‘take-out kitchens’, with no in-store seating and coffee and food items delivered via courier – with a free drink offered if an order does not arrive within 30 minutes.

Despite its rapid expansion and current $2.9bn valuation, Luckin Coffee has yet to produce a profit. The company delivered around $125m net revenue in 2018 with a $475m net loss attributable to shareholders.
 

 

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