China's Luckin raises $561 mln as it hopes to topple Starbucks
New York (AFP)
Chinese coffee chain Luckin, battling to dethrone Starbucks in the Asian giant, has raised $561 million ahead of its Wall Street listing, an IPO consulting firm said Thursday.
The Chinese company, which will debut on the Nasdaq Friday, set its share price at $17, at the high end of the range it announced in May.
It sold 33 million American depository receipts (ADRs) after initially marketing 30 million, said Renaissance Capital, which specializes in initial public offerings. The listing values the firm at more than $3.9 billion, according to Bloomberg.
ADRs allow foreign companies to list in America without being subject to strict rules that apply to US-based companies.
Luckin plans to use the funds to expand its network and lure new customers.
Since it was founded in 2017, the chain has built 2,370 stores in China as of March 31, focusing on offering customers quick grab-and-go service at its small stores or fast delivery to their homes and offices.
It uses a variety of coupons like free coffees and discounted cups to rope in customers and get them coming back to its stores.
The aggressive strategy mirrors tactics used by other Chinese startups that have dislodged Western brands from one of the world's top consumer markets.
The expansion and high marketing costs have seen its losses balloon in the 18 months it has been in business, racking up a loss of $241 million last year on $125 million in sales.
Luckin's caffeine-fuelled expansion has been funded by investors including Centurium Capital, a private equity fund founded by the former China head of Warburg Pincus, and Joy Capital.
Its founder Charles Zhengyao Lu earlier founded publicly-traded CAR Inc, one of China's largest car rental companies.
Luckin plans to open 2,500 stores this year and unseat Starbucks as China's largest coffee chain.
China is Starbucks' fastest-growing and second biggest market after the United States.
? 2019 AFP