Shein wins Chinese approval for Hong Kong IPO
Shein’s last private fundraising round in May 2023 valued it at US$66 billion
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[HONG KONG] China approved fast-fashion retailer Shein’s long-awaited Hong Kong IPO on Friday (Jul 10), a notice posted on the China Securities Regulatory Commission (CSRC) website showed, clearing the way for a listing that failed in New York and London.
A spokesperson for Shein did not immediately have any comment on the approval. The online retailer has waited a year for the green light from Beijing for its IPO, which had to be cleared by the highest levels of the ruling Chinese Communist Party, according to a source with direct knowledge of the matter.
Beijing views Shein as politically sensitive and has been wary of the company causing it further embarrassment after a sex doll scandal in France and reports of poor labour practices at its suppliers in China, the source said.
In 2022, Shein was valued at as much as US$100 billion, although investors then adjusted their numbers as a pandemic-era e-commerce boom fizzled out and opposition from politicians, retailers and regulators intensified.
Shein’s last private fundraising round in May 2023 valued it at US$66 billion.
The source said Shein could now be aiming for a valuation of US$40 billion to US$50 billion in its IPO. That would make it far smaller than its main rival Temu’s parent company PDD Holdings, which has a US$117 billion market capitalisation, but double the size of fast-fashion retailer H&M, which is worth around US$24 billion and has lost market share to Shein.
The fast-fashion retailer is likely to aim for its IPO offering in September or October, said the source.
Shein, founded by Chinese-born entrepreneur Sky Xu in 2012, hopes to succeed in Hong Kong after failed attempts to list in New York and then London.
The company, which sells US$5 dresses and US$10 jeans in around 150 countries, first filed for a US IPO in November 2023, but ran into growing resistance from lawmakers and regulators.
After the US filing stalled, Shein turned to London, where Britain’s Financial Conduct Authority approved a draft prospectus, but China’s CSRC withheld its approval.
Shein’s protracted struggle to go public illustrates how geopolitics has reshaped the path for Chinese companies seeking international capital and how Beijing has tightened its grip on successful entrepreneurs since it halted the IPO of Jack Ma’s Ant Group at the last minute in 2020.
New rules passed by the CSRC in 2023 allowed it to vet offshore listings and block offerings that could threaten the country’s national interests. Although Shein moved its headquarters to Singapore in 2022, it remained subject to Chinese IPO rules because its products are mostly made by a network of third-party suppliers in China.
A Shein listing would mark a boon for Hong Kong, which has emerged this year as one of the top listing locations globally.
In the last 12 months, the CSRC has cleared more than 180 other IPOs, public disclosures show, fuelling a boom for the city’s equity capital markets.
Founded in Nanjing, China, Shein has been caught in the middle as relations between the US and China soured and trade became increasingly politicised, with its business criticised in many countries for selling Chinese goods at rock-bottom prices and undercutting domestic retailers and manufacturers.
Shein was criticised by competitors, regulators and non-governmental organisations for issues including its addictive app, poor working conditions in factories, and high emissions from sending US$5 dresses across the world by air cargo. Its business model – buying clothes in China and sending them by air direct to the doorsteps of shoppers – has been challenged recently by US and European efforts to close customs loopholes and apply duties to cheap parcels. REUTERS
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