Beijing-based coffee chain Luckin Coffee on Monday filed for an initial public offering in the United States as it aims to expand its store network and boost its operations further in China.
The Chinese startup, which was valued at nearly US$3 billion in a recent funding round, did not disclose the number of shares it would offer in the IPO, but it set a placeholder amount of US$100 million, Reuters reports.
Luckin Coffee, which is challenging global giant Starbucks in the China market, currently operates 2,370 stores in 28 cities across the country and plans to open 2,500 new stores this year.
The expansion could help the firm displace Starbucks as the largest coffee chain in China.
In its latest round of funding, Luckin raised US$150 million from investors including BlackRock, valuing the company at US$2.9 billion.
However, the company is still loss making, Reuters noted.
Since inception on June 16, 2017, the company has been in the red, with net loss to shareholders coming at US$475.4 million in the year ended December 2018, and total revenue of $125.27 million, the report said, citing a filing with the US US Securities and Exchange Commission.
For the first three months of this year, Luckin Coffee posted a net loss of US$85.3 million.
Luckin said it will continue to spend on increasing its brand awareness, expand its customer base and store network and invest heavily in offering discounts and deals to keep bringing in more customers through its doors.
It, however, cautioned that revenues may not grow at the rate it expects that would offset higher expenses in the near future due to changes in regulation and increasing competition.
Luckin said it could continue to incur losses in the foreseeable future and “we cannot assure you that we will eventually achieve our intended profitability.”
The coffee chain was co-founded by Chief Executive Qian Zhiya, the former chief operating officer of Car Inc, and two other senior executives, and it is backed by Singapore sovereign wealth fund GIC.
Other investors in the company include venture capital firm Joy Capital and private equity firm Centurium Capital.
The company, which intends to list on the Nasdaq, chose New York for the listing as Hong Kong generally requires IPO applicants to have a track record of three financial years, sources told Reuters earlier.
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