Fast-fashion giant Shein has secured approval from Beijing to proceed with an Initial Public Offering (IPO) in Hong Kong, targeting a valuation exceeding $40 billion. The listing is anticipated as early as the third quarter of this year, marking a significant step for the company after previous attempts to go public in the United States and London stalled. The news was initially reported by Techmeme, citing the Wall Street Journal.
The move to Hong Kong comes after Shein canceled its US IPO plans for 2024. The US listing faced substantial resistance from lawmakers and regulators over concerns about alleged forced labor in its supply chain, data privacy, and its use of the "de minimis" customs loophole, which allows tariff-free imports of low-value goods. According to CNBC, experts deemed the US IPO "dead" due to these political and regulatory hurdles.
Shein had confidentially filed for a US IPO in November 2023 but encountered growing scrutiny from federal and state officials. The company, which moved its headquarters to Singapore but maintains a significant manufacturing base in mainland China, also faced questions regarding its ties to Beijing and potential data sharing. These factors contributed to the decision to pivot away from the US market.
Following the stalled US attempt, Shein explored a London listing, where Britain's Financial Conduct Authority approved a draft prospectus. However, this effort was effectively blocked when China's Securities Regulatory Commission (CSRC) withheld its approval, as reported by Reuters. The current Hong Kong approval from the CSRC clears a major obstacle in Shein's years-long journey to go public.
While the targeted valuation of $40 billion to $50 billion is lower than its peak private valuation of $100 billion in 2022 and $66 billion in May 2023, it still represents a substantial listing. The IPO could provide a much-needed boost to Hong Kong's equity markets, which have seen a slowdown in large-scale offerings. Shein plans to issue up to 341.6 million H shares in the offering.
