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China’s Starbucks Rival Luckin Aims to Raise More Than $500 Million in IPO

Luckin Coffee, the Chinese coffee company that filed paperwork last month to go public, said in a new filing that it planned to sell 30 million shares at between $15 and $17 per share. The company also is planning a share placement with commodities firm Louis Dreyfus, and together the two moves would raise up to $560 million, according to a report in the Wall Street Journal.

Luckin, which didn’t exist two years ago, is growing fast but is still smaller than Starbucks in China. It has about 2,400 stores where people can buy coffee and espresso drinks. It also has an app that customers can use to order and pay without cash and offers half-hour coffee delivery to workers’ desks.

At the high end of its IPO price range, the company would have an enterprise value of $3.1 billion, including $150 million the company raised in April, the Journal said.

There are some factors that suggest Luckin is on the right track: Coffee isn’t consumed all that widely in China yet, and the company has been working to build an image as a hip, tech-focused company. But it also has burned through piles of cash and remains unprofitable. Time will tell if Luckin has the right recipe for a successful public offering. But given public market reaction to recent IPOs by Uber and Lyft—two loss-making but growing companies—investors could be forgiven for approaching the offering with a double shot of skepticism.  

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