Luckin Coffee, backed by major investors including Abu Dhabi’s Mubadala, is planning a significant expansion into the wealthy Persian Gulf markets. This move highlights the Chinese coffee chain’s dramatic turnaround, as it has now surpassed Starbucks in China sales and is actively exploring a potential relisting on a U.S. mainboard.
Luckin Coffee, having successfully navigated a remarkable turnaround from its past accounting scandal, is now setting its sights on a significant international expansion into the lucrative Persian Gulf markets. This strategic move comes with the robust backing of Abu Dhabi's sovereign wealth fund Mubadala, signalling strong investor confidence in the Chinese coffee giant's renewed growth trajectory.
David Li, Chairman of Luckin Coffee and CEO of its controlling shareholder Centurium Capital, confirmed in an exclusive interview that senior management is actively exploring entry into these Gulf countries. This pursuit of new markets follows a $1 billion joint investment by Mubadala and Centurium in early September, bolstering Luckin's war chest.
Mubadala's involvement is notable, given its extensive portfolio that includes over $20 billion invested in China's burgeoning economy, spanning giants like e-commerce powerhouse Shein and real estate developer Dalian Wanda's shopping mall ventures.
This isn't Luckin's first glance at the Middle East; prior plans in 2019 to open shops there and in India were derailed by a devastating accounting fraud. The scandal led to fabricated sales figures, U.S. bankruptcy, and delisting from Nasdaq, intensifying American scrutiny on Chinese companies' stock listings. However, under Centurium's stewardship, Luckin has engineered a dramatic resurgence, even surpassing Starbucks as China's leading coffee chain by sales volume.
According to Luckin CEO Jinyi Guo, the appeal of the Gulf region stems from its stable, high-frequency coffee demand and a burgeoning consumer preference for health-conscious, low-sugar beverages. Beyond Luckin, Centurium Capital has also broadened its coffee footprint, acquiring the premium coffee brand Blue Bottle Coffee from Nestlé earlier this year.
While Luckin's shares, traded over-the-counter, currently value the company at approximately $9.6 billion, its China business rival Starbucks was valued at over $13 billion in a recent deal selling its controlling stake to Boyu Capital. Luckin is also reportedly "actively pushing" for a relisting on a U.S. mainboard, though a clear timeline remains contingent on Chinese regulatory approvals.
The company's robust turnaround has attracted a growing roster of institutional investors, including Singapore's Temasek, which disclosed a 6.4% stake, expressing strong confidence in the current leadership's vision for growth. While rapidly expanding in its existing overseas markets like Singapore (100 stores) and Malaysia (150 stores), and with 23 stores in New York City, these numbers pale in comparison to its massive presence of over 36,000 stores across mainland China and Hong Kong.
In the second quarter alone, Luckin recorded a 28.5% revenue increase, reaching 15.9 billion yuan ($2.34 billion). Its average monthly transacting customers surged by 23% to 112.7 million, driven by the addition of 2,714 net new stores during the period.
