Luckin prices US IPO at top-end, raises US$561 mln: report

May 17, 2019 09:10
Luckin Coffee plans to use the IPO proceeds mainly for store network expansion and marketing initiatives. Photo: Bloomberg

Chinese coffee chain Luckin Coffee priced its US initial public offering at the top end of a marketed range and sold more shares than planned, raising US$561 million, Reuters reports, citing sources familiar with the matter.

In the biggest US float by a Chinese company this year, Luckin Coffee sold 33 million American depository shares (ADS), more than the 30 million it originally said it would sell, at US$17 each, the report said.

The Beijing-based coffee chain had earlier marketed the offering in an indicative range of US$15 to US$17.

Each ADS represents eight Class A shares, Luckin Coffee said in a filing with the US Securities and Exchange Commission last week.

The pricing values Luckin, which is challenging Starbucks in the China market, at about US$4.2 billion.

Luckin, which has been backed by Singapore’s sovereign wealth fund GIC and US money manager BlackRock, is due to begin trading on the Nasdaq stock exchange on Friday under the symbol “LK”.

The company currently operates 2,370 stores across China and plans to open 2,500 more this year with the goal of displacing Starbucks as China’s largest coffee chain.

Co-founded in June 2017 by Chief Executive Qian Zhiya, Luckin plans to primarily use the IPO proceeds for store network expansion, customer acquisition, marketing, research and development.

The company has warned that it may continue to incur losses in the foreseeable future.

Last year, it recorded a net loss to shareholders of US$475.4 million and total revenue of US$125.27 million, according to the report.

For the first three months of 2019, it is said to have posted a net loss of US$85.3 million.

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