Shein aims for a $1.7 billion IPO in Hong Kong, setting its valuation at $26.5 billion amid rising concerns about growth
Shein plans to raise $1.7 billion in Hong Kong, which will value the fast-fashion giant at $26.5 billion, even as growth slows.
Online fast-fashion retailer Shein is poised to secure around $1.7 billion from its initial public offering (IPO) in Hong Kong, which would place the company’s valuation at roughly $26.5 billion, as reported by sources with knowledge of the situation.
The company is anticipated to set the IPO price at HK$48.56 per share, close to the midpoint of its advertized range of HK$47.60 to HK$49.50, according to sources.
The pricing would enable Shein to generate approximately HK$13.6 billion ($1.73 billion) from the offering.
The sources requested to remain anonymous, as the information has not yet been disclosed to the public. Shein has not yet provided a response to the request for comment.
The valuation positions Shein at approximately one-fourth of its nearly $100 billion peak in the private market from 2022 and considerably lower than the $66 billion valuation achieved in a fundraising round in 2023.
Shein, headquartered in Singapore and founded in China, launched its Hong Kong IPO on Monday following unsuccessful attempts to list in New York and London over the past four years.
The overall IPO order book was fully covered by Tuesday, although reports indicate that retail investor demand has been somewhat weaker.
Alvin Cheung, associate director at Hong Kong securities firm Prudential Brokerage, noted that investor enthusiasm for new listings has diminished after an Asian market correction in July.
He noted that Shein’s growth potential was also under scrutiny due to increasing costs and heightened online competition.
“‘Shein didn’t list in Hong Kong when it was at its peak, so why should we consider them now that their growth is declining?’” Cheung remarked, reflecting the views of certain investors.
Shein’s subscription rates for institutional and retail investors are set to be released on Monday, just one day prior to the commencement of the company’s shares trading on the Hong Kong Stock Exchange.
The IPO signifies a significant achievement for the fast-fashion retailer, recognized for offering affordable clothing in approximately 160 countries, with dresses priced around $5 and jeans around $10.
Nevertheless, the company has encountered regulatory examination and increasing business challenges in its primary US and European markets.
Cornerstone investors, including existing shareholders Boyu Capital, Tiger Global, and General Atlantic, have committed to approximately $383 million in shares, as stated in Shein’s prospectus.
Other investors involved in the offering comprise Tencent, Greenwoods, Taikang Life, and UBS Asset Management.
Shein intends to allocate approximately 80% of the IPO proceeds to enhance its technology infrastructure and broaden its brand presence and global reach.
The company has also consented to pay up to approximately $3.5 billion in cash to specific investors who acquired special shares during previous private funding rounds.
The listing arrives as Shein faces challenges with slowing revenue growth, diminished earnings, and shrinking profit margins, coupled with increased trade costs, stricter regulations, and growing competition.
The company anticipates that revenue growth for the first half will generally align with the 1.1% achieved in the first quarter, although a slight decline in its operating margin is expected.
