Shein, the fast-fashion giant, is set to list on the Hong Kong stock exchange on 1 September with a valuation of close to $27 billion, significantly lower than its near-$100 billion private market peak four years ago. The company’s initial public offering (IPO) has been one of the longest-awaited in recent years, following failed attempts to list in New York and London due to concerns over forced labor and supply chain issues. Shein’s decision to list in Hong Kong comes after the company moved its headquarters to Singapore between 2021 and 2022, a move analysts believe was intended to avoid increasing global scrutiny of Chinese firms.
The company has faced questions over its supply chain, particularly regarding the use of cotton produced in the Xinjiang region of China, which has been linked to forced Uyghur labor. Founded by entrepreneur Chris Xu, Shein runs most of its operations from China but sells all its goods outside the country. The company reached a valuation of $100 billion in an April 2022 fundraising round, making it the third most valuable startup in the world.
However, it has since faced challenges, including slowing growth and rising costs, and swung to a loss of $99 million in the first three months of this year. Shein’s IPO will offer nearly 280 million shares for between HK$47.60 and HK$49.50 each, raising roughly £1.3 billion for the company at the top end of the range. The final offer price will be set on the day before it starts trading on 1 September.
Despite its challenges, Shein remains one of the continent’s biggest e-commerce platforms, with a European customer base of 156 million average monthly users by the end of last year. The company’s business model, which involves sending goods directly to shoppers from China, has prompted calls for a change in tax rules. Shein has also faced criticism, with hundreds of customers lining up to protest outside its first-ever physical outlet in Paris.
According to Susannah Streeter, chief investment strategist at Wealth Club, Shein’s IPO will be a harder sell, with investors questioning whether its low-cost formula still has the star power to deliver growth.
