With a reduced growth outlook expected to impact investor interest, Shein hopes to raise up to $1.8 billion in a Hong Kong IPO, valuing the fast-fashion retailer about 70% below its private-market peak four years ago.
The eagerly anticipated Hong Kong IPO follows Shein’s cancelation of plans to list in New York and London during the previous four years. Shein is well-known for selling $5 gowns and $10 jeans to customers in around 160 countries.
According to the company’s papers, Shein started the process on Monday to sell 280 million shares at a price between HK$47.60 and HK$49.50 per share, raising up to HK$13.86 billion ($1.77 billion) and valuing it at about $27 billion at the top of that range.
The significant drop in valuation coincides with Shein’s outlook being clouded by tariffs, increased competition, and growing costs.
Shein’s 2023 and April 2024 valuations were $64 billion. The IPO is expected to value the firm at about a fraction of the $100 billion it was valued in 2022, according to an exclusive story from Reuters last week.
Analysts predicted that the company’s fundraising would be impacted by the mounting challenges in its primary markets of the US and Europe, even after it drastically reduced the valuation.
Lorraine Tan, Singapore-based director of equities research for Asia at Morningstar, stated that “the decline in Shein’s valuation largely reflects the change in prospects for the company from, say, two to three years ago when its IPO was first mooted.
“We think that worldwide investors’ interest in Shein has likely decreased as a result, which is why the listing price has dropped.”
At $27 billion, Shein is worth about 0.7 times the projected sales. It is more costly than its European competitor Zalando’s (ZALG.DE), which opens new tab 0.4 times, but less expensive than H&M (HMb.ST), which opens new tab, and Inditex (ITX.MC), which trade at about 1.1 times and 4.0 times, respectively.
