Image: Visual China

BEIJING, January 28 (TMTPOST) — Centurium Capital announced on Friday that an investor consortium it led has completed the acquisition of a stake in Luckin Coffee (OTC: LKNCY).

The consortium that Centurium Capital led includes IDG Capital and Ares SSG Capital Management.

Upon the completion of the transaction, Centurium Capital will become the biggest shareholder of Luckin Coffee and also its majority shareholder. 

Luckin Coffee has been experiencing an internal power struggle after its accounting fraud scandal. The company’s founder and CEO Qian Yazhi was suspended in May 2020 and the company’s board Lu Zhengyao also resigned from his position. Multiple internal factions within the company have since then been fighting over control of Luckin Coffee.

Centurium Capital’s gaining control over Luckin Coffee eliminates chances for Qian and Lu to regain their control over the scandal-tarred company.

There have been a number of speculations about Luckin Coffee’s future direction after the deal. “The buyers include IDG Capital and Ares. The deal came as a surprise,” an investor told New Consumer Daily. “The two shareholders will want more from Luckin Coffee. This might accelerate the process for Luckin Coffee to go back to the stock market.”

Centurium Capital has not commented on the news reports.

The investment firm is an early investor of Luckin Coffee, according to corporate data Tianyancha.

Centurium Capital, Joy Capital, GIC and Legend Capital invested in Luckin Coffee’s series A round financing in 2018. The financing round raised US$200 million. The investment firm was involved in Luckin Coffee’s series B round financing six months later as well.

In April 2020, Luckin Coffee was exposed for an accounting fraud, in which the company artificially inflated its sales and revenue. The company admitted in an announcement on April 2, 2020 that it had fabricated 2.2 billion yuan of sales. Luckin Coffee’s share price on Nasdaq slumped by 80% after the scandal.

Despite Luckin Coffee’s infamous reputation, Centurium Capital has remained confident in the company. Luckin Coffee announced in April 2021 that it reached a financing agreement with Centurium Capital’s subsidiary and Joy Capital, raising US$250 million.