LUCKIN Coffee Inc., the Chinese challenger to Starbucks Corp., on Monday filed for an initial public offering (IPO) with the U.S. Securities and Exchange Commission, after being valued at nearly US$3 billion in its latest round of funding.

The Beijing-based coffee chain set a placeholder amount of US$100 million to indicate the size of the IPO and did not disclose the number of shares it would offer, a filing with the regulator showed.

Luckin Coffee, expanding at breakneck speed, currently operates 2,370 stores in 28 Chinese cities and plans to open 2,500 new stores this year — displacing Starbucks as China’s largest coffee chain in the process.

The brand is banking on an increase in coffee consumption in the country which, according to a report cited by the Luckin in the prospectus, has grown from 4.4 billion cups annually in 2013 to 8.7 billion last year, with an expectation it will continue to rise to 15.5 billion cups a year by 2023.

In its latest round of funding, Luckin raised US$150 million from investors including BlackRock Inc., valuing the company at US$2.9 billion.

However, the company is still loss-making. Since its inception 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 Dec. 31, 2018, and total revenue of US$125.27 million, according to the filing. For the first three months of this year, it posted a net loss of US$85.3 million.

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.”

(SD-Agencies)