Shein secures HK listing committee nod for $50b IPO

Shein won HKEX listing committee approval for its IPO targeting a $40 billion to $50 billion valuation, three people with knowledge of the matter said, bringing the fast-fashion retailer closer to its Hong Kong stock market debut.

"The Hong Kong listing suggests Shein is further embracing rather than distancing itself from its China identity," Sheng Lu, professor of fashion and apparel studies at the University of Delaware, said. "Instead of reducing China exposure as Western fashion companies have been doing, Shein continued to expand and strengthen its supply chain presence in China."

The company expects to issue 341.6 million H shares in the offering, according to its China Securities Regulatory Commission filing. Shein is working on plans to raise between $2 billion and $3 billion, with the share sale possibly launching as early as August, Bloomberg reported. The company has indicated it could sell up to 8 percent of its shares, though the final stake is likely to be lower.

The listing committee hearing was scheduled for Thursday, with Shein required to answer questions about its operations and finances. Once a company secures the nod from the exchange listing committee, it can proceed with investor roadshows and book-building, according to local market rules. The company could aim to list in September or October, a source said.

A Long and Winding Road

Shein's path to a public listing has been complicated by geopolitical tensions. Founded by Chinese-born entrepreneur Sky Xu in Nanjing in 2012, the company first filed for a US IPO in November 2023 but faced opposition from lawmakers and regulators. It then turned to London, where Britain's Financial Conduct Authority approved a draft prospectus but Beijing withheld its authorization, effectively blocking the listing.

The CSRC approval in July closed out a roughly 12-month wait that began when Shein quietly submitted its Hong Kong listing application last year. Despite having moved its base of operations to Singapore, Shein remained subject to Chinese regulatory oversight because the vast majority of its merchandise is produced by contract factories on the Chinese mainland.

Shein 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 US closed a customs duty loophole for e-commerce parcels. Its most recent fundraising round in May 2023 valued it at $66 billion. The company has come under pressure from shareholders to reduce its valuation to $30 billion, according to Bloomberg.

Backers and Regulatory Scrutiny

Shein's backers include Brookfield, Claure Group, D1 Capital, General Atlantic, HSG, formerly known as Sequoia Capital China, Reliance, SoftBank, Abu Dhabi sovereign wealth fund Mubadala Investment, and Saudi Arabia's sovereign wealth fund PIF.

The company has faced criticism from competitors, regulators and advocacy groups over 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 been fined more than 200 million euros ($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.

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. At a $40 billion to $50 billion valuation, Shein would be roughly twice the size of H&M, valued at about $24 billion, and less than half of PDD Holdings, the parent of rival Temu, which has a market capitalization of about $117 billion.

The pricing gives Shein an enterprise value well below its 2022 peak, reflecting the tougher regulatory and competitive environment. First-day trading, expected as soon as September, will test institutional demand for one of the most closely watched consumer listings in years.

This article is for informational purposes only and does not constitute investment advice.