On April 15, Luckin Coffee announced that it had reached a new financing agreement of USD 240 million – with Centurium Capital – and of USD 10 million with Joy Capital.
According to the agreement, these two shareholders will be able to invest another USD 150 million, in proportion, under certain conditions.
This round of financing will be mainly used for Luckin Coffee's overseas debt restructuring plan and to fulfill its obligations in the recently settled agreement with the US Securities and Exchange Commission. Luckin Coffee said the investment would help the company continue to implement its business plan and focus on developing its coffee business in order to achieve its long-term growth goals.
Founded in October 2017 and listed on NASDAQ in May 2019, Luckin Coffee is the largest chain coffee brand in China. From the establishment to IPO, Luckin Coffee only took 18 months, hitting a new record of the fastest IPO in the world. However, on June 29, 2020, Luckin Coffee was officially suspended and delisted because of fraud.
On December 17, 2020, the US Securities and Exchange Commission (SEC) announced that Luckin Coffee agreed to pay USD 180 million to reach a settlement on the fraud charges of SEC approved by the Southern District Court of New York State on February 4, 2021.
Outsiders had previously speculated that it might be Centurium Capital and Joy Capital that would be involved in the financing of Luckin Coffee. Centurium capital and Joy Capital promoted the management adjustment of Luckin Coffee after the fraud incident and took the initiative to save Luckin Coffee.
As for the reasons behind this, an investor told the media that the fundamentals of Luckin Coffee should be fairly good. These institutions have a better understanding of Luckin Coffee, and this investment is also an attempt for the enterprise to survive. As the source said: "after all, survival is the first priority of Luckin Coffee at this time."