Starbucks’ Chinese Rival Luckin Files For $586.5 Million IPO

Luckin Coffee, a rapidly growing and soon-to-be local force, is a Chinese startup that rivals Starbucks and will likely continue that trend with its upcoming offering worth $586.5 million.

Luckin filed for an initial public offering (IPO) on Monday, depositing its documents with the U.S Securities and Exchange (SEC). In the filing, the startup has offered to sell $34.5 million American depository shares (ADS), with each ADS offered at a price of between $15 and $17.

As per the IPO filing, any given ADS will represent eight class A shares.

The fast-growing startup recently revealed that it would be opening 2500 more stores this year. The move could see it up its challenge and outpace Starbucks, becoming the top Chinese Coffee chain. At the moment, Luckin has 2370 operational stores in 28 cities in China.

Luckin’s growth is attributed to a spike in coffee consumption in the country, with current estimates putting it at 8.7 billion cups. That sharp rise is almost double 2013 figures when the Chinese consumed 4.4 billion cups of coffee.

And according to the company’s prospectus, current figures will double again by 2023 to reach 15.5 billion cups.

Further growth for Luckin Coffee has come from its ventures outside of the coffee industry, with the firm launching an app that allows clients to purchase food items and beverages. Clients can use the app to shop for and buy things like grapefruit cheese, chicken, and Sichuan cold noodles among others.

Established in 2017, Luckin has failed to turn profits and has cautioned investors that it could run more losses in the near term.

As per its IPO filing, the company posted a net loss of $475.4 million to shareholders, while the total revenue was $125.27. it already made a net loss of $85.3 million between January and March this year.

CEO Qian Zhiya, who formerly worked for auto rental company Car as COO, founded Luckin. The startup counts GIC Pte Ltd, a sovereign wealth fund of Singapore.

Others to back the company are U.S.-based fund manager BlackRock, Centurium Capital, and Joy Capital. The latter two are both China-based investment firms.

Luckin will be listed on the Nasdaq and trade under the “LK” ticker. Morgan Stanley and Credit Suisse highlight a team of six underwriters.