Shein, a fast-growing e-commerce giant, would be the highest-profile retailer to list in years, as many consumer brands have delayed initial public offerings due to weak investor sentiment and subdued spending by lower- to middle-income shoppers. Founded by Chinese-born entrepreneur Sky Xu in 2012, Shein has waited a year for the green light from Beijing for its IPO, which had to be cleared by the highest levels of the ruling Communist Party, according to a source with direct knowledge of the matter.
Beijing views Shein as politically sensitive and has been cautious about endorsing a listing after controversies including a sex doll scandal in France and reports of poor labour practices at its supplier factories in China, the source said. Shein filed confidentially for its Hong Kong IPO and had not made the filing documents public as of Friday. With CSRC approval, the company can organise investor roadshows and prepare for its hearing with the Hong Kong stock exchange’s listing committee, a requirement for all IPO candidates.
The company could possibly aim to list in September or October, the source said. Shein’s backers include Brookfield, Claure Group, D1 Capital, General Atlantic, HongShan Capital – formerly Sequoia Capital China, Reliance, SoftBank, Abu Dhabi sovereign wealth fund Mubadala Investment, and Saudi Arabia’s sovereign wealth fund PIF.
A spokesperson for Shein declined to comment.
VALUATION DOWN SHARPLY SINCE 2022Shein was valued at as much as $100 billion in 2022, but investors later marked down its worth as the pandemic-driven online shopping boom faded and the U.S., its biggest market, closed a customs duty loophole for e-commerce parcels. Its most recent fundraising round, in May 2023, valued it at $66 billion. Shein could now be targeting a valuation of $40 billion to $50 billion in its IPO, the source said.The company has indicated it could sell up to 8% of its shares, although the final stake sold is likely to be lower, raising low-single-digit billions of dollars. Given the lower valuation, Shein would also compensate investors by providing funds to buy shares in the offering, according to the source.
That would make it far smaller than main rival Temu’s parent company PDD Holdings, which has a market capitalisation of about $117 billion, but roughly twice the size of fast-fashion retailer H&M, valued at about $24 billion and which has lost market share to Shein.
NEW YORK AND LONDON ATTEMPTS
Shein’s Hong Kong listing would end an IPO journey that took it around the world. The company, which sells $5 dresses and $10 jeans in around 150 countries, first filed for a U.S. IPO in November 2023, but faced opposition from lawmakers and regulators.
Shein then turned to London, where Britain’s Financial Conduct Authority approved a draft prospectus but the CSRC withheld its approval, effectively blocking the listing. Shein’s lengthy path to market highlights how geopolitical tensions have complicated overseas listings by Chinese-linked companies and reflects Beijing’s tighter oversight of prominent entrepreneurs since it halted the IPO of Jack Ma’s Ant Group at the last minute in 2020.
New CSRC rules in 2023 give it authority to vet offshore listings and block offerings deemed contrary to national interests. Although Shein moved its headquarters to Singapore in 2022, it remains subject to Chinese IPO rules because its products are mostly made by third-party suppliers in China. A Shein listing would be a boost for Hong Kong, which has re-emerged this year as one of the world’s busiest listing venues.
Public filings show the CSRC has approved more than 180 other IPOs over the past 12 months, helping drive a revival in the city’s equity capital markets.
INVESTIGATIONS
Founded in Nanjing, Shein has found itself at the centre of growing trade tensions between the U.S. and China. The company has faced criticism from competitors, regulators and advocacy groups over issues including working conditions in supplier factories, allegedly addictive features of its shopping app, and the environmental impact of shipping large volumes of low-cost clothing by air.
Shein has said it has a zero-tolerance policy on labour abuses, and has invested in risk assessments and mitigation frameworks to safeguard users. Its business model – buying clothes in China and sending them direct to the doorsteps of shoppers – has also been challenged recently by U.S. and European efforts to impose duties on low-value imports.
Shein has been fined more than €200 million ($228 million) by French regulators over its use of consumer data and misleading discounts. The European Commission opened a formal investigation into the company in February over the sale of illegal products.
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