Luckin Coffee startup backer raises over $2bn

China’s Centurium Capital, a big backer of domestic startup Luckin Coffee, said it has raised more than $2 billion in its debut fund. (Reuters)
Updated 03 July 2019

Luckin Coffee startup backer raises over $2bn

  • US dollar fund will help firm invest in Chinese VIEs
  • Centurium invested $180m in Luckin Coffee’s first two funding rounds

HONG KONG: China’s Centurium Capital, a big backer of domestic startup Luckin Coffee, said it has raised more than $2 billion in its debut fund, giving the private equity firm more firepower to cut deals involving the world’s second-largest economy.

The firm, co-founded by the former head of Warburg Pincus Asia Pacific, David Li, said on Wednesday that Centurium Capital Partners 2018 L.P. raised the sum in US dollars.

The fund secured strong interest from global investors, known as limited partners (LPs), such as pension funds, sovereign wealth funds and funds-of-funds, it said.

Investors in the fund include Singapore’s GIC Pte Ltd. and Temasek Holdings, Canada’s Ontario Teachers’ Pension Plan, China Investment Corp. (CIC) and US pension fund Washington State Investment Board, said two people with knowledge of the matter.

Centurium declined to comment on the fund’s LPs. All the investors didn’t immediately respond to requests for comment.

The US dollar fund will help Centurium invest in Chinese firms that use overseas structures such as variable-interest entities.

Centurium joins several China-focused private equity and venture capital managers who raised $17.3 billion in dollar-denominated funds in the first half of the year, versus $13 billion over the same period last year, according to data provider Preqin.

Launched in March 2018, Centurium’s maiden fund reached the first close of nearly $1 billion three months later and has beaten the $1.5 billion and $1.98 billion fundraising targets since then.

Beijing-based Centurium was set up in early 2017 by Li and two other partners. Li had worked with Warburg Pincus for 14 years and led several investments for the US buyout firm in China, including in top car rental service provider CAR Inc. 

“After helping several entrepreneurs fulfill their entrepreneurial dream for so many years, I also have my dream of launching our own (investment) firm,” Li said.

Centurium primarily seeks control and significant minority investment opportunities across China’s consumer, services and health care sectors where it looks to boost operational efficiency and tackle structural deficiencies.

“The Chinese business environment nowadays needs a new generation of investors that combine the global PE best practice and local experience,” Li said.

“Instead of being a pure capital provider, firms like Centurium can better integrate with local markets, and be more efficient and responsive to provide bespoke local solutions to new challenges and opportunities.”

Centurium began to gain recognition last year when it made a big bet on Luckin Coffee, the Chinese challenger to Starbucks Corp. It invested about $180 million in Luckin in the startup’s first two fundraising rounds.

Li said that Centurium has invested about 40 percent of the capital raised in the debut fund in five firms in China and aims to fully deploy the fund by the end of next year.


Cathay Pacific to slash workforce, end Cathay Dragon brand due to pandemic

Updated 21 October 2020

Cathay Pacific to slash workforce, end Cathay Dragon brand due to pandemic

  • Airline to seek changes in conditions in its contracts with cabin crew and pilot
  • Plans to merge Cathay Dragon into Cathay’s main brand earlier this year hit roadblocks

SYDNEY: Hong Kong’s Cathay Pacific Airways Ltd. said on Wednesday it would slash 5,900 jobs and end its regional Cathay Dragon brand, joining peers in cutting costs as it grapples with a plunge in demand due to the coronavirus pandemic.
The airline would also seek changes in conditions in its contracts with cabin crew and pilots as part of a restructuring that would cost $283.9 million (HK$2.2 billion), it told the stock exchange.
Overall, it will cut 8,500 positions, or 24 percent of its normal headcount, but that includes 2,600 roles currently unfilled due to cost reduction initiatives, Cathay said.
“The global pandemic continues to have a devastating impact on aviation and the hard truth is we must fundamentally restructure the group to survive,” Cathay Chief Executive Augustus Tang said in a statement.
Cathay shares jumped almost 7 percent in early trade and were 4 percent higher at 0430 GMT, with broker Jefferies saying the announcement removed a key overhang on the stock.
Singapore Airlines Ltd. and Australia’s Qantas Airways Ltd. have already announced similarly large payroll cuts, as the International Air Transport Association forecasts passenger traffic will not recover until 2024.
Cathay, which has stored around 40 percent of its fleet outside Hong Kong, said on Monday it planned to operate less than 50 percent of its pre-pandemic capacity in 2021.
After receiving a $5 billion rescue package led by the Hong Kong government in June, it had been conducting a strategic review that analysts expected would result in major job losses.
The airline said it was bleeding HK$1.5 billion to HK$2 billion of cash a month and the restructuring would stem the outflow by HK$500 million a month in 2021, with executive pay cuts continuing throughout next year.
BOCOM International analyst Luya You said she had expected more strategic insight from the airline on its fleet plans and route network as part of the restructuring.
“Had they revealed more on fleet planning for 2021-22, we would get a much better sense of their outlook,” she said.
The decision to end regional brand Cathay Dragon is in line with rival Singapore Airlines’ pre-pandemic move to fold regional brand Silkair into its main brand.
Cathay Dragon, once known as Dragonair, operated most of the group’s flights to and from mainland China and had been hit by falling demand before the pandemic due to widespread anti-government protests in Hong Kong that deterred mainland travelers.
Plans to merge Cathay Dragon into Cathay’s main brand earlier this year hit roadblocks from China’s aviation regulator because of infractions during last year’s pro-democracy protests, two sources told Reuters in May.
Cathay said the airline would cease operating immediately and it would seek regulatory approval to fold the majority of Cathay Dragon’s routes in Cathay Pacific and low-cost arm HK Express.
In the short-term, the closure of the Cathay Dragon brand will result in it being unable to carry cargo to Fuzhou, Guangzhou, Kuala Lumpur and Fukuoka, and it will only send dedicated freighters to Xiamen, Chengdu and Hanoi, it told cargo customers in a memo, indicating the routes were cut for now.
“The reintroduction of service coverage will differ from port to port,” Cathay said.
Like Singapore Airlines, Cathay lacks a domestic market to cushion it from the fall in international travel due to border closures.
In September, Cathay’s passenger numbers fell by 98.1 percent compared with a year earlier, though cargo carriage was down by a smaller 36.6 percent.