Third time’s the charm. E-commerce fast fashion giant Shein has received approval for its Hong Kong IPO, per an update on the China Securities Regulatory Commission (CSRC) website posted last Friday.
Shein first filed for a Hong Kong IPO a year ago, after failed attempts in the United States and the UK. The company plans to sell up to 341.6 million H-shares, according to the CSRC. Shein will reportedly seek to raise US$2 to $3 billion in the IPO. Shein did not respond to a request for comment.
“Shein’s decision to list in Hong Kong was something of a forced choice because it had regulatory difficulties listing in London and New York, including pressure from China,” Neil Saunders, managing director of Globaldata’s retail division, says. “Hong Kong is a good exchange, but it doesn’t provide the access to capital or the global legitimacy of New York or London.”
There are perks to staying closer to home, says Jeff Trexler, associate director of Fordham University’s Fashion Law Institute. “Home field advantage can help in business as well as sports,” he says, noting that the approval is the natural response to the Chinese government’s reported unhappiness with Shein going public abroad. “An IPO in London or New York arguably would have exposed the organization to Western oversight of Shein’s governance and operations to a somewhat greater degree,” he says.
Shein’s most recent fundraising round, back in May 2023, valued the company at $66 billion, which was down from a peak valuation of $100 billion in 2022. Experts now expect Shein to target a valuation of around $40 billion for the IPO, following a bumpy period amid allegations linking it to production in Xinjiang (which Shein has denied) and tariff-induced setbacks. (The removal of the de minimis rule for low-value shipments to the US was an additional setback for Shein and other fast fashion businesses.)
“There will be strong interest in the listing, but it is unlikely to receive the fanfare that was originally hoped for, and the valuation will come in lower than initial speculation,” Saunders says. He ascribes this to increased pressure on Shein’s business model, including tariff restrictions in Western markets, a more cautious consumer, rising costs, and increased scrutiny around sustainability. Shein’s latest surprise move was the acquisition of sustainability-focused brand Everlane, announced in May, which many industry commentators viewed as an unconvincing bid to improve its image.
Trexler notes similar perception-induced hits to Shein’s valuation, but anticipates it will achieve a decent share price. “I suspect at some point it might become evident that an investment in Shein is as much in a tech company as a fashion brand,” he says. “It’s as if the AI Allbirds had kept selling shoes,” he jokes.
It isn’t yet clear when Shein will list, but it could be as early as this fall. “We should know more after the Thursday hearing,” Trexler says.
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