Abu Dhabi sovereign wealth fund Mubadala Investment has agreed to make a minority investment in Luckin Coffee (USOTC:LKNCY) as part of a transaction involving the Chinese coffee chain’s controlling shareholder, Centurium Capital, totalling approximately $1 billion.
The transaction is being carried out alongside Centurium and remains subject to customary closing conditions. Mubadala said it sees long-term potential in China’s freshly brewed coffee market.
According to a U.S. Securities and Exchange Commission filing, Mubadala and entities related to Centurium will jointly report beneficial ownership of approximately 22.1% of Luckin on an as-converted basis.
The agreement also gives Mubadala’s investment vehicle the right to nominate a director to Luckin’s board while it holds at least 5% of the company on an as-converted basis, subject to the terms of the investment agreement.
Luckin Reports More Than 36,000 Stores
Luckin had more than 36,000 stores globally as of June 30 and nearly 500 million cumulative transaction customers, according to the announcement.
The company reported second-quarter revenue of approximately 15.9 billion yuan, an increase of about 29% from the prior-year period. Operating profit rose around 22% to 2.1 billion yuan.
According to the SEC filing, the Mubadala investment provides Centurium with an additional institutional investor and extends Centurium’s investment horizon in Luckin.
Luckin trades over the counter in the U.S. under the ticker USOTC:LKNCY. The shares closed at $33.55 on September 8, down 3.6% for the session.