Singapore sovereign wealth fund GIC Pte has invested $15 million in Indonesian coffee chain Kopi Kenangan in yet another caffeine shot for the institutional investor that has previously backed scandal-embroiled Luckin Coffee.
Salween Investment, a GIC vehicle, was the second-largest investor in Kopi Kenangan’s recent $109 million Series B funding round, accounting for about 14 per cent of the fundraise, according to data compiled by DealStreetAsia.
Venture capital firm Sequoia Capital, which led the round, invested $38 million, while B Capital injected $10 million through its Fund II. Other investors in the round included Belgian family investment firm Verlinvest, venture firm Horizons Ventures, and gaming company Kunlun Group. Alpha JWC, the Indonesian venture firm that led Kopi Kenangan’s $8 million seed round in 2018, also joined the latest financing.
The investment by GIC will represent its second dip into the world of coffee chains. The sovereign fund had previously made investments in China’s Luckin before its 2019 US initial public offering. GIC has sold down its direct stake in Luckin, but the Financial Times has reported that it retains a minor indirect exposure.
Luckin, which roared into the headlines with its ambition to overtake Starbucks in China and a strong Nasdaq debut, has since come under the cloud of an alleged accounting scandal. In April, the company announced that it had uncovered fake transactions worth about 2.2 billion yuan ($310 million) through an internal probe. The company fired chief executive Jenny Zhiya Qian and chief operating officer Liu Jian on Tuesday.
Luckin’s market capitalisation was about $6.6 billion before the April disclosure of the fake transactions. Its market cap today is about $1.1 billion, with its shares having lost more than four-fifths of their value.
Despite Luckin’s fresh troubles souring the coffee landscape across the region, GIC did not partake of some watered-down brew with Kopi Kenangan.
The Series B round valued the Indonesian startup at about $477 million, indicating a more than threefold increase in the 16 months since its December 2019 extended Series A round, which valued the company at about $145 million. Those valuations assume that all of the startup’s existing ordinary and preference shares are worth the same as shares sold in each funding round — $2,005 for each Series B preference share and about $785 for each extended Series A ordinary share, according to regulatory filings seen by DealStreetAsia.
The new valuation means that investors who joined the coffee chain’s capitalisation table in its December 2019 financing — a list that includes B Capital’s partners and celebrity investors Jay-Z and Serena Williams — are looking at a paper gain of about 150 per cent as a result of the new valuation.
The funding gives Kopi Kenangan precious capital at a time when business activity in Indonesia and the region has slowed to a crawl as a result of the COVID-19 pandemic. Food and beverage establishments, in particular, have been hit by social distancing restrictions and consumers’ aversion to crowded places.
Kopi Kenangan currently operates 324 stores across Indonesia but is also eyeing regional expansion into Malaysia, the Philippines and Thailand.
The investment round and the quality of the investors that took part, including GIC, also boost Kopi Kenangan’s standing in Indonesia’s fierce coffee wars. Key rival Fore Coffee, which is backed by East Ventures, Pavilion Capital and Agaeti Venture Capital, is also understood to be in the market to raise tens of millions of dollars.