Luckin coffee, the ambitious Chinese entrepreneur who is chasing Starbucks, could raise nearly $ 600 million from its next IPO. That’s according to a price range published by the Chinese startup.
In a new filing, Luckin said he plans to sell 30 million shares at an initial range of $ 15- $ 17. That gives an estimated increase of $ 450 million to $ 510 million, but could be increased if underwriters take on the additional allocation. 4.5 million shares. So, as a grand total, the list could raise $ 586.5 million if the entire offering is bought at the top of the range.
The company will be listed on the Nasdaq as “LK”.
Luckin was introduced to the public last month, just weeks after a $ 150 million Series B + funding round closed led by New York private equity firm Blackrock, which has a 6.58 percent stake. cent at Starbucks. The deal valued Luckin at $ 2.9 billion and led the three-year company to $ 550 million raised by investors to date.
The company has consumed incredible amounts of cash while trying to quickly build a brand that can compete with Starbucks, and the presence that the US firm has built in the last 20 years in China. Through aggressive promotions and coupons, the company posted a loss of $ 475 million in 2018, its only full year of business to date, with $ 125 million in revenue. For the first quarter of 2019, it posted a loss of $ 85 million with total sales of $ 71 million.
Starbucks CEO Kevin Johnson has scoffed at the viability of such a “heavy discount” strategy.
“We are deploying capital and building 600 new stores per year. [We’re] “We generate the return on invested capital that we believe is sustainable to continue building new stores at this rate for many years,” he told CNBC in a recent interview.
Starbucks claims 30,000 stores around the world. It has been in China for 20 years and its goal is to reach 6,000 stores in the country by 2022. Luckin, fueled by that venture capital money, has rapidly escalated to 2,370 locations in less than two years with plans to add more. 2,500 this year. That would see it outperform Starbucks, which has 3,600 stores in 150 Chinese cities, though that metric provides a distorted view as Luckin specializes in digital ordering and on-demand delivery. That is in contrast to the retail model operated by Starbucks.