Shein finally wins China's approval for Hong Kong IPO, in third attempt to go public

Shein, a fast-growing e-commerce giant, would be the highest-profile retailer to list in years, as many consumer brands have delayed initial public offerings due to weak investor sentiment and subdued spending by lower- to middle-income shoppers.

Founded by Chinese-born entrepreneur Sky Xu in 2012, Shein 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 Communist Party, according to a source with direct knowledge of the matter.

Beijing views Shein as politically sensitive and has been cautious about endorsing a listing after controversies including a sex doll scandal in France and reports of poor labour practices at its supplier factories in China, the source said.

Shein filed confidentially for its Hong Kong IPO and had not made the filing documents public as of Friday. With CSRC approval, the company can organise investor roadshows and prepare for its hearing with the Hong Kong stock exchange's listing committee, required for all IPO candidates.

The company could possibly aim to list in September or October, the source said.

Shein's backers include Brookfield, Claure Group, D1 Capital, General Atlantic, HSG, formerly known as Sequoia Capital China, Reliance, SoftBank, Abu Dhabi sovereign wealth fund Mubadala Investment, and Saudi Arabia's sovereign wealth fund PIF.

The Hong Kong listing suggests that Shein is further embracing rather than distancing itself from its China identity, said Sheng Lu, professor of fashion and apparel studies at the University of Delaware.

"Instead of reducing China exposure as Western fashion companies have been doing, Shein continued to expand and strengthen its supply chain presence in China," he said.

Shein was valued at as much as $100 billion in 2022, but investors later marked down its worth as the pandemic-driven online shopping boom faded and the U.S., its biggest market, closed a customs duty loophole for e-commerce parcels.

Its most recent fundraising round in May 2023 valued it at $66 billion.

Shein could now be targeting a valuation of $40 billion to $50 billion in its IPO, the source said. The company has indicated it could sell up to 8% of its shares, although the final stake sold is likely to be lower, raising low-single-digit billions of dollars.

Given the lower valuation, Shein would also compensate investors by providing funds to buy shares in the offering, according to the source.

That would value it at less than its main rival, Temu's parent company PDD Holdings, which has a market capitalisation of about $117 billion. It would be roughly twice the size of fast-fashion retailer H&M, valued at about $24 billion, which has lost market share to Shein.

Shein's Hong Kong listing would end an IPO journey that took it around the world.

The company, which sells $5 dresses and $10 jeans in around 150 countries, first filed for a U.S. IPO in November 2023, but faced opposition from lawmakers and regulators.

Shein then turned to London, where Britain's Financial Conduct Authority approved a draft prospectus but the CSRC withheld its approval, effectively blocking the listing.

Shein's lengthy path to market highlights how geopolitical tensions have complicated overseas listings by Chinese-linked companies and reflects Beijing's tighter oversight of prominent entrepreneurs since it halted the IPO of Jack Ma's Ant Group at the last minute in 2020.