Foreign media revealed that Luckin Coffee sought a loan of 200 million US dollars before IPO was denied by Luckin Coffee: no comment

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Luckin Coffee is seeking at least $200m in loans from investment banks such as Goldman Sachs and Morgan Stanley, Reuters said today, citing people familiar with the matter. The deal could make the investment banks underwriters of Luckin Coffee's initial public offering (IPO) in the United States.

Luckin Coffee has authorized Credit Suisse to be the lead underwriter for its IPO, possibly as early as May, valuing it at about $3 billion, people familiar with the matter told Reuters last month. At the same time, Morgan Stanley and Goldman Sachs are also advising Luckin Coffee on the preparations for IPO.

Lu Zhengyao, Luckin Coffee's non-executive chairman and angel investor, offered a loan of $200m, mainly backed by his personal shares in Luckin Coffee, according to people familiar with the matter.

While it is not uncommon for Chinese companies to raise loans from banks that want to qualify for IPO underwriting, it is rare for executives or shareholders to ask for such personal financing, several people working on IPO told Reuters.

Analysts said Lu Zhengyao's financing deal was linked to IPO underwriting qualifications, indicating that Chinese companies or their investors are increasingly demanding investment banks. Credit Suisse has agreed to provide some of the $200m loan, while Goldman and Morgan Stanley are still negotiating the terms of the loan, according to two people familiar with the matter.

Another bank decided not to provide loans because of the lack of transparency in Mr Lu's fund-raising plan, so he is not expected to participate in Luckin Coffee's IPO, according to one of the people familiar with the matter.

People familiar with the matter also said that if Luckin Coffee eventually fails to list, the loan collateral (Luckin Coffee shares held by Lu Zhengyao) will be replaced by Lu Zhengyao's shares in Car Inc, a Hong Kong-listed car rental company. According to the data, Lu Zhengyao is also chairman of Car Inc, with a stake of about 33 per cent.

Credit Suisse, Goldman Sachs and Morgan Stanley declined to comment on the report. A spokesman for Luckin Coffee told Reuters that he did not know about it. Lu Zhengyao did not answer calls from Reuters, nor did he reply to text messages seeking confirmation.

Luckin Coffee denied the news of "chairman's loan of 200 million US dollars": no comment.

Later, in response to a report by Reuters yesterday that Luckin Coffee was seeking a US IPO and that Lu Zhengyao, its non-executive chairman, would pledge $200m in stock loans to several investment banks, including Credit Suisse, China Economic Network today asked Luckin Coffee for confirmation that "the news is not true and will not comment."

Reuters reported that Luckin Coffee is seeking a US IPO at a valuation of $3 billion, which is expected to be completed as early as May, and that Lu Zhengyao, the company's angel investor and non-executive chairman, is seeking $200m in loans from investment banks including Credit Suisse and Morgan Stanley.

The report also said that Lu Zhengyao will use Luckin Coffee's shares to guarantee a $200 million loan, and if Luckin Coffee cannot IPO, Lu Zhengyao will guarantee his shares in China car Rental. As chairman of China car Rental Board, Lu Zhengyao "owns 33% of China car Rental shares," Reuters said. However, according to public information, Lu Zhengyao does not own Shenzhou car rental shares.

Since its introduction to the market last year, Luckin Coffee has expanded rapidly and conducted two rounds of financing totaling $400m, building more than 2000 stores a year, and the company said it would achieve more than 4500 stores by the end of 2019, surpassing Starbucks as the largest coffee chain in China.

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