ABU DHABI: Abu Dhabi wealth fund Mubadala Investment Co becomes a backer of Luckin Coffee Inc, China’s biggest coffee chain.
Mubadala is now an indirect investor in Luckin following a deal with its main private equity backer, Asian investment firm Centurium Capital, according to a regulatory filing.
It will have the right to appoint one director to Luckin’s board. The transaction is valued at about US$1bil, it said in a separate statement.
The sovereign fund has been a big investor in China, backing companies including fast-fashion retailer Shein Global Holdings Ltd and mall operator Zhuhai Wanda Commercial Management Group Co.
It’s also bought stakes in freight startup Full Truck Alliance Co and e-Commerce giant JD.com Inc’s supply chain arm.
Founded in 2017, Luckin has expanded with more than 36,000 stores offering low-cost coffee and other customised drinks such as coconut or cheese lattes.
The company’s adjusted net income rose nearly 23% in the second quarter to 1.75 billion yuan (US$261mil) as it boosted customer numbers and opened thousands of additional outlets.
Luckin’s American depositary receipts have gained about 1% this year, giving the company a market value of US$9.7bil.
The company trades on the US over-the-counter market after being delisted from the Nasdaq in 2020 following allegations of accounting fraud.
Since then, it’s been expanding its business with the hopes of relisting on a major stock market.
Centurium is led by former Warburg Pincus dealmaker David Li.
The Mubadala transaction sees two existing Centurium vehicles, including its first US dollar denominated fund raised in 2018, sell 241 million Luckin preferred shares to a fund backed by Mubadala, according to the filing.
Mubadala is a “significant limited partner” in the fund buying the stake, it said.
The deal will be financed through a bank loan with the stock pledged as collateral. Centurium said it’s reaffirming its commitment to Luckin and extending the horizon of its investment. — Bloomberg
