Reports have emerged that Chinese beverage chain Luckin Coffee is exploring plans to relist its shares in the U.S. following a high profile removal in June 2020, according to the Financial Times on Friday, citing two people familiar with the matter. Luckin has since denied the report.
The relisting report emerged nearly two years after an accounting scandal in which the brand fabricated more than $300 million in sales.
Luckin was once regarded as the biggest challenger to Starbucks’ dominant position in the Chinese market, but it delisted from the Nasdaq in June 2020 and agreed to pay $180 million six months later to settle the accounting fraud charges filed by the the U.S. Securities and Exchange Commission. The company claims it raised more than $864 million from investors during the accounting fraud.
According to the Financial Times’ report, Luckin is exploring whether to relist on Nasdaq, possibly as soon as the end of this year. Luckin has held meetings with investors and advisers ahead of the proposed relisting, as well as to discuss other options for capital raising. They said new management and recent growth at the coffee company could prove an attractive turnround prospect for investors.
Luckin’s Q3 financial report showed that its total net revenue in the period was 2.35 billion yuan ($364.7 million), an increase of 105.6% compared with 1.143 billion yuan in the same period last year. Its net loss was 23.5 million yuan, a year-on-year decrease of 98.6%. The firm’s average monthly transacting customers totaled 14.7 million, up 79.2% year-on-year.
A relisting for Luckin Coffee would likely face fewer regulatory obstacles than other Chinese company pursuing an initial public offering in the U.S. because its shares are still traded there and it has continued to file earnings reports, the alert said.