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Jan. 14 (NBD) -- Some investment bank has started preparing listing materials for Luckin Coffee, the Chinese coffee start-up that is taking on Starbucks, regarding an initial public offering (IPO) in Hong Kong, news portal EqualOcean reported Sunday citing sources familiar with the matter.

Luckin Coffee declined to comment on the news, when contacted by NBD.

Reuters last November reported the coffee upstart was in IPO talks with overseas investment banks and predicted the listing to take place in Hong Kong or New York.

It's noted that Luckin Coffee has set up an overseas branch in Hong Kong and appointed Reinout Schakel, former executive at Standard Chartered Bank, as its chief financial officer on January 7. Having also worked at Credit Suisse and PwC, Schakel has more than 10 years of experience in equity and debt financing and mergers and acquisitions.

These two moves have been perceived as preparation for the Hong Kong listing.

Founded in 2017 and starting trial operation in January 2018, Luckin Coffee rose to one of the fastest-growing start-ups in China within one year.

Data from business and investigation Tianyancha showed that after the coffee start-up finished its Series B financing round worth 200 million U.S. dollars last December, it was valued at 2.2 billion U.S. dollars, doubling its valuation of 1 billion U.S. dollars last July.

Luckin Coffee claimed it has sold 89.68 million cups of coffee to 12.54 million consumers till the end of last year. However, the coffee upstart couldn't shake off the label of big subsidies and costly advertisement campaigns from its expansion strategy.

In the first nine months of 2018, Luckin Coffee reaped 375 million yuan (55.5 million U.S. dollars) in sales proceeds, but still incurred net losses of 857 million yuan (126.9 million U.S. dollars).

The "cash-burning" model aroused heated public discussions and even made people question Luckin Coffee's future. Will it follow in the steps of Ofo which is mired in debts?

"The company's cash flow is fine and can afford unprofitable operation of 3-5 years," Yang Fei, Luckin Coffee's chief marketing officer once said, adding that the company wasn't worried about any financial strain and would not become the next Ofo.

Ever since inception, Luckin Coffee has chosen a path in stark comparison with Starbucks which opened its first store in mainland China in 1999 and has spent two decades reaching its current store count of 3,600 in over 150 Chinese cities.

As of December 31 of 2018, Luckin Coffee has set up 2,073 outlets, and earlier this month, the coffee new-comer announced its plan to open 2,500 new stores across China in 2019, in a bid to overtake Starbucks.

Email: gaohan@nbd.com.cn