Lucky Ace International Ltd., the exclusive franchise holder of the Japanese coffee store % Arabica in Greater China, is aiming to raise $300 million to fund its expansion and has reached out to possible investors for the round, according to a Bloomberg report. Lucky Ace was valued at $800 million to $900 million in its last funding round, Bloomberg’s sources confirmed.

The sources added that discussions are still underway and that the projected funding size and valuation could change. Pacific Alliance Group (PAG), one of % Arabica’s investors, declined to comment, and the coffee chain did not reply immediately to requests for comment via email and its website. General Atlantic is also one of the company’s backers, among other private equity investors.

According to % Arabica’s China website, the gourmet coffee company entered China in 2017 by opening two stores in Hong Kong before launching in Shanghai the following year. The website shows that there are 61 outlets across the country. 

In a country that is dominated by tea drinkers, coffee remains a niche drink in China, as reported by Bloomberg Intelligence analysts Angela Hanlee and Kai Lin Choo in April. The country’s annual consumption is only 5.3 cups per capita, compared with 51.1 cups for the rest of Asia Pacific.

Apart from % Arabica, Japanese coffee brand Doutor Coffee also entered the China market and opened its first shop in Shanghai in August 2018. The coffee roasting and franchising company is known for its affordable “trademark drip coffee, sandwiches, and crepe.”

Bartalks reported that the founder of % Arabica, Kenneth Shoji, was able to fulfil his goal of opening the coffee shop’s first-ever branch in the United States on 11 June 2021.

The hit Japanese coffee chain is also known for being a concept store, one of which is its branch in Abu Dhabi at Capital Marina’s Mall. It is the first UAE branch to offer the % Arabica Kiosk, whose pods have been in development for years.

In a Bloomberg news report in October, Shanghai-based Manner Coffee, backed by ByteDance Ltd (the owners of TikTok). and a venture arm of food delivery giant Meituan, is eyeing an initial public offering in Hong Kong that could raise at least $300 million.

Much of the people’s awareness of coffee in China can be attributed to Starbucks Corp. and Luckin Coffee Inc., which have over 5,000 and 6,000 locations, respectively, but while the big chains may have driven the coffee drinking culture, young Chinese want more Instagram-able speciality coffee and are turning to boutiques, including the upmarket % Arabica.

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