In the process of Chinese coffee, Starbucks, the “coffee evangelist”, has honestly handed over its command. The sale of a controlling stake in Starbucks' China business has finally been settled. On November 4, Starbucks officially announced that it has reached a strategic cooperation with Boyu Investment. The two parties will establish a joint venture to jointly operate Starbucks’ retail business in the Chinese market.
According to the agreement between the two parties, Boyu Investment will hold up to 60% of the equity in the joint venture, involving an amount of approximately US$4 billion (excluding cash and debt); Starbucks retains 40% of the equity and will continue to be the owner and licensor of the Starbucks brand and intellectual property, licensing the newly established joint venture.
Starbucks estimates that the total value of its China retail business will exceed US$13 billion, mainly composed of three parts: the proceeds from the transfer of the controlling interest in the joint venture to Boyu, the value of the equity retained by Starbucks in the joint venture, and the licensing operating income that will continue to be paid to Starbucks over the next ten years or more.
Previously, Starbucks' arrangement to sell a controlling stake in its Chinese business had attracted many contenders. According to media reports, many world-renowned large PE institutions have appeared on the list of potential buyers. Among them, Carlyle Group, Boyu Capital, Sequoia China, Primavera Capital, EQT Group, etc. all entered the finals in early September.
Regarding this bidding, a person familiar with the matter revealed that Boyu Investment was determined to win and defeated other opponents with the highest price.
With Boyu Investment taking control of Starbucks China, the Chinese coffee market has ushered in an era of fierce competition among coffee giants led by PE.
Boyu Investment Express
Founded in 2011, Boyu Investment is an alternative asset management company with deep roots in the Chinese market and global presence. It was co-founded by Zhang Zixin, the former general manager of Ping An Group, and Ma Xuezheng, the former China executive of TPG Capital. It focuses on Greater China and has a global presence. Its business covers multiple asset classes such as private equity, public markets, real estate and infrastructure, and venture capital.
Boyu Investment manages funds worth tens of billions of dollars. Technological innovation, consumer retail and medical health are the three key areas in which it focuses deeply.
Since the beginning of this year, Boyu has been making continuous investment moves and is quite active.
In the first half of this year, star companies such as Mixue Bingcheng, CATL, Hengrui Pharmaceuticals, and Haitian Flavors have launched IPOs on the Hong Kong stock market, and Boyu Investment’s name is among their cornerstone investor lists.
For example, in the Hong Kong IPOs of Mixue Bingcheng and Hengrui Pharmaceuticals, Boyu, as a cornerstone investor, subscribed for US$40 million in shares each. Cambridge Technology listed on the Hong Kong stock market in October, and Boyu Investment subscribed for US$20 million in shares.
However, compared to being an IPO cornerstone investor, the most important thing for Boyu Investment is to acquire equity in large projects. It usually sells billions of dollars at a time.
In March and April this year, Boyu Investment invested more than 2.3 billion yuan to buy the actual control rights of Jinke Services through judicial auctions and tender offers.
In early May, the acquisition of equity in Beijing Hualian SKP Mall triggered antitrust review.
In May this year, the fifth phase of Boyu Investment’s USD Fund acquired approximately 42%-45% of the equity of Beijing SKP Mall through related parties. The overall valuation of SKP is US$5 billion, and Boyu’s investment in this transaction exceeds RMB 10 billion.
In early October, Boyu was revealed to be leading a consortium interested in acquiring Infront Sports Media, a Swiss sports marketing company held by Wanda Group.
In the 14 years since its establishment, it has invested in more than 200 companies and has a team of more than 170 people. Compared with those investment institutions that have small but sophisticated teams and only make one deal every few years, the low-key Boyu is quite active and even aggressive in the investment market.
PE controls coffee landscape
In the press release announcing the official cooperation, Boyu Investment Partner Huang Yuzheng said: "We will work closely with Starbucks to integrate Starbucks' leadership in the global coffee industry with Boyu's in-depth local market insights, and are committed to accelerating growth and creating an excellent coffee experience for a wider range of Chinese consumers."
Boyu Investment joined Starbucks China and became its front-line commander in the Chinese market.
Perhaps in order to cope with the fierce competition in the Chinese coffee market, not long ago, Luckin Coffee welcomed back its former director, Li Hui, founder of Dacheng Capital.
In April this year, Luckin Coffee announced that the company’s chairman and CEO Guo Jinyi would no longer serve as chairman of the company’s board of directors and would continue to serve as CEO and board member. At the same time, the board of directors has approved the appointment of Li Hui to return to the company as a director and chairman of the board.
Dacheng Capital is an important shareholder of Luckin Coffee. According to public information, as of February 28, 2025, Dacheng Capital held 31.3% of Ruixing’s equity and 53.6% of the voting rights, making it the largest shareholder of Ruixing Coffee.
As of the end of the third quarter of 2025, Luckin Coffee ranks first with approximately 26,000 stores; Kudi has approximately 14,000-15,000 stores; Luckin Coffee under Mixue Bingcheng has approximately 9,000 stores, and Starbucks has 8,011 stores. Based on the number of coffee stores, they are the leader in China’s coffee market.
It is worth mentioning that Boyu Investment is also a shareholder of Mixue Bingcheng. This means that the two major PE companies, Dazheng Capital and Boyu Investment, will compete in the Chinese coffee market and become front-line traders that influence the market structure.
Coffee flocks to sinking market
Where will the coffee market grow next? The giants are all targeting the sinking market.
Brian Niccol, chairman and CEO of Starbucks Coffee Company, made it clear in the press release: "Boyu's experience and expertise in the local market will effectively accelerate Starbucks' expansion in the Chinese market, especially in small and medium-sized cities and emerging regions."
As of the fourth quarter of fiscal year 2025, Starbucks has entered 47 new county-level markets, with a net increase of approximately 415 stores throughout the year. Obviously, Starbucks is accelerating its expansion in sinking markets.
In order to adapt to the sinking market, Starbucks is turning to lighter store types (such as takeout/catch stores) and closer to local demand in terms of products and prices to balance costs and profitability.
Luckin and Cudi are also increasing their investment in the market.
In the first half of 2025, Luckin Coffee's new stores in third-tier and lower cities accounted for approximately 62% of the total number of new stores nationwide, and have covered more than 800 county-level administrative regions.
About one-third of Kudi Coffee’s stores are located in fourth- and fifth-tier cities, and it has been accelerating its penetration into counties and towns through the path of “low investment, high coverage, and rapid expansion.” In the next few years, Kudi will continue to accelerate the opening of stores in sinking markets and transform sinking markets into important growth poles.
Lucky Coffee itself started from the sinking market. According to public information, Lucky Coffee plans to have more than 10,000 stores by the end of 2025. While maintaining its advantage in the lower-tier market, it will accelerate its penetration into first- and second-tier cities.
Today, the competition in China’s coffee market has gone from 9 yuan to 9 yuan to 3 yuan. It is foreseeable that coffee priced at 3 yuan and 9 yuan will flood into the sinking market.
In the process of Chinese coffee, Starbucks, the "coffee evangelist", has honestly handed over its command.