China’s second-largest coffee chain Luckin has filed for an initial public offering (IPO) in New York. The Beijing-based coffee chain applied to be listed on Nasdaq under the ticker symbol LK. Credit Suisse, Morgan Stanley, CICC, and Haitong International are serving as the underwriters.
Luckin’s IPO application comes after it secured a USD 150 million investment from BlackRock and other investors last week.
The coffee chain, founded in June 2017 and little known outside China, sold about 90 million cups of coffee last year, serving more than 16.8 million customers, according to its prospectus.
Luckin has “expanded from a single trial store in Beijing to 2,730 stores in 28 cities in China” and 91.3% of their stores are pick-up locations that demand “low rental and decoration costs”.
It plans to unseat Starbucks as the largest coffee network in China by the end of 2019. Starbucks, which entered China in 1999, now operates more than 3,700 stores in over 158 Chinese cities.
But right now, the plan to dethrone Starbucks is an uphill charge given the coffee start-up’s financial position. Luckin has recorded a USD 82.2 million net loss for the first quarter of 2019. The company has also reportedly pledged all its coffee machines as collateral for a USD 6.7 million loan a few weeks ago.