New Delhi: Shein’s debut public listing (IPO) is officially underway, with the company seeking to raise as much as HK$13.86 billion ($1.77 billion). But the listing also shows a significant decline in the company’s value relative to its high valuation a couple of years ago.
Shein is selling 280 million shares, with a HK$47.60 – HK$49.50 per-share price. The company’s highest valuation would be about $27 billion. This is almost 70% less than what it was valued at in the private markets in 2022, which was around $100 billion.
The Hong Kong listing marks Shein’s return to Hong Kong following its previous attempts in New York and London, where political and regulatory challenges were a hurdle to listing. The company plans to go public, with funding to come from Hong Kong, where it is seeking to raise additional capital for its business internationally.
Shein’s Valuation Takes a Big Hit
In the rapid expansion of ecommerce, Shein emerged as one of the planet’s most valuable privately owned businesses. However, in recent years its growth has been hindered. The company is being increasingly challenged for its trade share, trade costs and regulatory environment in key markets like the United States or Europe.
Import regulations and tariffs in the U.S. have also made Shein’s low prices more difficult. The company’s U.S. revenue fell 14.3% due to changes in the import tariff rules, sources reported.
The drop in the IPO valuation reflects the current investors’ pessimistic outlook on Shein. Rather than being a rapidly growing start-up, investors have come to see it as a more established international retailer facing increased expenses and competition.
Banks to Receive Nearly $40 Million in Fees
Shein has also welcomed a new batch of banks into its IPO fray for Hong Kong. The company anticipates to pay up to to HK$306 million ($39 million) in fees to the banks that participated in the transaction.
Key banks participating are the Goldman Sachs, Morgan Stanley, JPMorgan and major other financial institutions like the HSBC, UBS, Bank of America Securities, Haitong International etc. The total cost comes out to nearly 2.2% of the fresh capital that Shein will raise.
Shein intends to invest in the majority of the proceeds from its IPO in technology and brand expansion, with a portion going to bolster its overseas business. The Company is projected to commence trading in The Hong Kong Exchange soon on 1st September.
The IPO will be a crucial test for Shein, then, for its success. It will reveal if investors believe the rapid decline in valuation has not dented the long-term prospects for the fast-fashion firm or as the questioner of the fast fashion model’s business grows bigger, it’s seen as a company with less value.
