By Summer Zhen, Helen Reid and Selena Li
LONDON/HONG KONG, Aug 4 (Reuters) – Shein is seeking a valuation of $30 billion to $40 billion in a Hong Kong initial public offering (IPO) that the online fast-fashion retailer plans to launch as early as mid-August, three people familiar with the matter said.
Shein started pre-deal investor meetings last week, one person said. The deal could be launched in mid-to-late this month, said two of the people, all of whom declined to be named as the plans are confidential.
The valuation target marks a dramatic reset for Shein, whose worth peaked at $98.2 billion in 2022 before falling to $64 billion in 2023 and April 2024 in private fundraising rounds as growth slowed and external pressures mounted.
The IPO valuation target, which has not been previously reported, and the launch timeline are not final yet and subject to change after feedback from investor meetings, said the people.
Shein has not publicly disclosed the IPO size, the offer price, and the listing timetable. The Singapore-headquartered company, which was founded in China, did not immediately respond to a Reuters request for comment.
The draft IPO prospectus of Shein last month showed that the company swung to a $99 million quarterly loss due to slowing sales after the U.S. removed an import duty exemption on small packages and a hefty one-time accounting charge.
While the loss partly reflected a $328 million fair-value charge on convertible redeemable preferred shares following an accounting change, slowing revenue growth and weaker core earnings highlight growing strains on the business.
Shrinking margins have also raised concerns that Shein’s breakneck expansion is running into headwinds from higher trade costs, tighter regulatory scrutiny and intensifying competition across global e-commerce.
Shein, known for selling $5 dresses and $10 jeans to shoppers in about 160 countries, is prioritising a price that can support the shares after the listing rather than maximise valuation, said the first source.
Some potential cornerstone investors in the IPO are pushing for a valuation closer to $30 billion or $32 billion, the source said, adding Shein has held investor meetings in New York, Boston and San Francisco over the past week.
LOWER IPO VALUATION
A $30 billion to $40 billion valuation, if achieved, would place Shein’s IPO broadly alongside H&M, worth about $26 billion, but it will be well below Uniqlo-owner Fast Retailing at $161 billion and Zara parent Inditex at $208 billion.
Shein is also exploring measures to lower the cost of investment for some late-stage investors, according to the draft prospectus, as the IPO valuation was expected to be below the value at which it previously raised private capital.
It may offer payouts to early investors as well as more shares with lower conversion price for their holdings, Reuters reported on Monday citing the company’s public filings with the Hong Kong stock exchange.
Shein won approval from the China Securities Regulatory Commission (CSRC) for its Hong Kong listing on July 10, clearing the way for a listing after failed attempts in New York and London.
The company has said in its draft prospectus that it intends to use proceeds from the offering to fund technology investments, global brand-building, corporate responsibility initiatives and general corporate purposes.
(Reporting by Summer Zhen and Selena Li in Hong Kong, Helen Reid in London, and Yantoultra Ngui in Singapore; Editing by Sumeet Chatterjee and Shri Navaratnam)
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