Shein IPO Values Firm at $26.5 Billion
Shein's Hong Kong IPO raised $1.7 billion, valuing the online fashion retailer at $26.5 billion, with pricing near its range midpoint.
Online fast-fashion retailer Shein is set to price its Hong Kong initial public offering near the midpoint of its marketed range, raising US$1.7 billion. Two people with knowledge of the matter said this values the company at about $26.5 billion.
The sources, who spoke anonymously, said the deal will be priced at HK$48.56 per share. This is near the midpoint of the HK$47.60 to HK$49.50 range and will raise about HK$13.6 billion. Shein did not respond to a request for comment.
This valuation confirms a report from Reuters last week. That report stated Shein's IPO would value it at about one-quarter of its nearly $100 billion private market peak in 2022. It is also well below its $66 billion valuation from a 2023 fundraising round.
IPO Details and Investor Demand
Shein, headquartered in Singapore and founded in China, launched its Hong Kong IPO on Monday. Reuters reported on Tuesday that the overall IPO book had been fully covered. Subscription rates from institutional and retail investors will be published on Monday, a day before trading begins on the Hong Kong Stock Exchange.
However, demand from retail investors was reportedly not overly strong. Alvin Cheung, associate director at Hong Kong securities firm Prudential Brokerage, said enthusiasm for new listings in Hong Kong had weakened after a market correction in July. He also said Shein's growth prospects were being questioned amid rising costs and increased online competition.
Cheung relayed investor sentiment, stating they had thought, "'Shein didn't list in Hong Kong when it was in its prime, why should we take them now (that growth is slipping)?'" Shein did not respond to Reuters on its subscription levels.
Use of Proceeds and Financial Challenges
The IPO follows attempts over the past four years to list in New York and London. The company, known for selling $5 dresses and $10 jeans in about 160 countries, has faced regulatory challenges and business pressure in key US and European markets.
Cornerstone investors have subscribed for about $383 million of shares, the prospectus showed. This group is led by existing shareholders Boyu Capital, Tiger Global and General Atlantic. Tencent, Greenwoods, Taikang Life and UBS Asset Management will also buy shares.
Shein said it would use about 80 per cent of the IPO proceeds to improve its technology and expand its brand and global reach. It has also agreed to pay up to about $3.5 billion in cash to certain investors who bought special shares in earlier private funding rounds.
The company is facing slower revenue growth, weaker earnings and shrinking margins. These add to concerns over higher trade costs, tougher regulation and competition. Shein expects first-half revenue growth to broadly match the 1.1 per cent reported in the first quarter, while its operating margin is expected to decline slightly.
Goldman Sachs, Morgan Stanley and JPMorgan are joint sponsors on the IPO. The 10-strong bookrunners list includes only one Chinese bank, Guotai Haitong, alongside global banks such as UBS, BofA Securities and HSBC.
