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Luckin Coffee pours out initial paperwork for IPO
Posted on Tuesday, 23 April 2019 13:51
Luckin Coffee, the Chinese rival to Starbucks, is launching an initial public offering (IPO) by filing documents with the US Securities and Exchange Commission for a stock market flotation on Nasdaq.
The Beijing-headquartered hot drinks chain did not disclose the number of shares it would offer or announce the pricing of the planned listing at this time.
It did set a placeholder of USD 100.00 million; however, this initial figure is used to calculate registration fees and the final price usually changes depending on the financial terms of the deal.
That being said, after the initial paperwork was filed, Reuters cited two people close to the matter as saying Luckin Coffee is looking to raise between USD 500.00 million and USD 800.00 million from the flotation, which is expected to take place next month.
According to one of the news provider’s other sources, the group is aiming for a valuation ranging from USD 4.00 billion to USD 5.00 billion.
Luckin Coffee secured series B+ funding of USD 150.00 million last week, taking its total series B financing to USD 350.00 million and valuing the business at USD 2.90 billion, which is significantly less than the USD 5.00 billion high-point insiders gave Reuters.
The company is billed as the second-largest coffee shop operator in China, behind global leader Starbucks.
It has long been known that Luckin Coffee is aiming to open an additional 2,500 outlets in the country this year, bringing its total to 4,500, challenging its US-based rival’s dominance of 3,600 cafes.
Within an 18-month period, the business grew from a single trial store in Beijing to a network of over 2,370 locations in 28 cities across China, as of 31st March 2019.
Luckin Coffee posted a net loss of CNY 551.78 million (USD 82.21 million) on revenue of CNY 478.51 million in the opening three months of 2019, compared to a loss of USD 132.23 million and turnover of CNY 12.95 million in the corresponding period of 2018.
The company has hired Credit Suisse, Morgan Stanley, CICC and Haitong International to underwrite the IPO, the proceeds of which are likely to be used to expand its store count.
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