Abu Dhabi sovereign wealth fund Mubadala is investing in Luckin Coffee as part of a transaction valued at around $1 billion.

The sovereign investor is joining private equity group Centurium Capital, Luckin’s controlling shareholder, in backing the company.

Founded in 2017, Luckin Coffee expanded rapidly by using low prices and a technology-led operating model to attract Chinese consumers. The business has continued opening stores at scale and has increasingly positioned itself around products and formats that appeal to China's evolving beverage culture.

Luckin ended last year with almost 31,000 stores across China and Hong Kong, according to its latest annual report. It also operated outlets in Singapore, Malaysia and the US. Globally, the company now has approximately 36,000 stores.

 Mohamed Albadr, head of Asia, private equity at Mubadala, said: "We continue to see compelling long-term opportunities in China’s consumer sector. Luckin Coffee has built a differentiated, technology-enabled business with data embedded across customer engagement, product development and store operations. This combination of scale, digital capabilities and rapid product innovation has enabled the Company to respond to evolving consumer preferences efficiently and at pace."

Mubadala's investment in Luckin comes as Abu Dhabi continues to deepen its economic relationship with China, while also seeking opportunities in advanced technology and maintaining significant economic ties with the US.

Michael Chen, partner of Centurium Capital, said: “We are pleased to welcome Mubadala as an investor in Luckin Coffee. We are confident that Mubadala’s sector knowledge combined with its global perspective and network will support Luckin Coffee’s continued innovation and long-term development.”

The size of Mubadala’s minority investment has not been disclosed.