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Luckin Coffee Raises USD 150 M in Series B+, Valuation Reaches USD 2.9 Billion
COVID-19 and China
Luckin keeps a professional image in coffee making. Photo: Credit to Luckin Coffee official website

On April 18, 2019, Luckin Coffee (瑞幸咖啡) completes its series B+ fundraising with an extra amount of USD 150 million, valuation reaches USD 2.9 billion. The private equity fund under Black Rock invests USD 125 million in this round, according to iYiou.com.

Luckin Coffee was founded in Nov. 2017, aiming to be the Starbucks in China’s retail market.

In the past one and a half year, this startup company grows into a giant chain brand with more than 2000 stores in China. So in average, 5.5 Luckin Coffee shop makes its first debut in China every day, with a total of 12.54 million consumer customers, and sold 89.68 million cups of coffee, achieving a 100% coverage within 500 meters in the core areas of Beijing and Shanghai (see more on this article). This fast-growing mode though being highly controversial due to its high net loss of CNY 857 million by Dec. 2018.

Starbucks, who’s been often compared with Luckin Coffee (see more on Luckin vs. Starbucks), opened 3,400 stores after 19 years of entering the Chinese market.

Even though in a state of loss, Luckin Coffee is never short of money from its high-profile beginning. According to public information, since the second half of last year, Luckin Coffee has accelerated in its fundraising process. In July 2018, the company completed the series A funding of USD 200 million, ranked as a “unicorn”. Five months later, it received another USD 200 million in series B round. Luckin Coffee is only one and a half years old, its fundraising has only proceeded to series B+, but the news about its listing has continued to flow out in 2019.

Reinout Schakel, who’s been appointed in Jan. 2019 as the company's Chief Financial Officer and Chief Strategic Officer, has served as an executive director of Standard Chartered Bank HK and has worked for Credit Suisse and PricewaterhouseCoopers for many years. He has over 10 years of equity, debt financing, and M&A experiences. For the past six years, Reinout Schakel has been providing consulting services to leading consumer and retail companies in the Asia Pacific region.

According to Reuters news, Luckin Coffee has already contacted three investment banks such as Credit Suisse, Goldman Sachs, and Morgan Stanley, preparing for  US IPO this year. Its goal is to seek for a USD 3 billion valuation in the IPO. The schedule of the Luckin Coffee’s IPO plan was also revealed that earliest in May or June or second half of this year, the procedure may be put on schedule. Rumor said Hong Kong might also be the IPO destination (see more on this article) for Luckin Coffee. However, none of these news have been officially recognized.

Early this April, Luckin Coffee was on the news for chattel mortgage registration. The information shows that the mortgagee is Zhongguancun Technology Leasing Co., Ltd., and the amount of secured creditor's rights is CNY 45 million. The collaterals including coffee machines, milk boxes, powder bins and other items, the property belonging to Luckin stores in Beijing, Shanghai, Guangzhou, Shenzhen, Chengdu, etc.

Luckin Coffee, though running as a startup in the new retail industry, is operating with a financial logic underneath.

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