Shein Aims for $27bn Valuation as Hong Kong IPO Set for 1 September

Fast-fashion giant Shein has announced plans to list on the Hong Kong Stock Exchange, aiming to raise up to HK$13.86 billion (approximately £1.3 billion; $1.77 billion). Trading is scheduled to begin on 1 September. According to a regulatory filing on Monday, the company will offer nearly 280 million shares at a price range of HK$47.60 to HK$49.50 per share.

If priced at the top of the range, Shein would achieve a valuation of close to $27 billion (£19.8 billion). This figure is a sharp decline from the $100 billion valuation the company commanded during a private fundraising round in 2022. The significant drop is attributed to slowing sales growth and rising operational costs, as well as a more challenging regulatory environment.

The Hong Kong listing is a long-awaited development, following unsuccessful attempts to go public in the United States and London. Those efforts were hampered by regulatory obstacles and increased scrutiny of the company's supply chain and business practices. Shein, which was founded in China and is now headquartered in Singapore, will be backed by major investment banks including Goldman Sachs, Morgan Stanley, and JP Morgan.

The company's financial performance has come under pressure in recent months. In July, Shein reported a net loss of $99 million for the first quarter of the year, a sharp turnaround from a net income of $395 million in the same period last year. The company attributed the decline to weaker sales in the US, particularly after the removal of the de minimis exemption. This waiver had allowed low-value packages to enter the country without incurring import duties, a benefit that Shein and other e-commerce platforms such as Temu had leveraged to grow rapidly in the US.

In response to increased duties and taxes, Shein said it is exploring a range of options, including raising prices in the US market to offset some of the additional costs. The company also cited the conflict in Iran as a factor that has hurt demand, raised expenses, and led to delivery delays in certain markets. Additionally, the first-quarter results included a paper loss of $328 million due to an accounting adjustment related to special investor shares. These shares, which can be converted into ordinary stock at a later date, may change in value before the listing.

Industry analysts have expressed caution about Shein's ability to maintain its competitive edge. Marguerite LeRolland, of market research firm Euromonitor International, told the BBC that the company's sales in the US have slowed, partly because of the end of the de minimis exemption. That exemption enabled Shein and similar retailers to deliver goods without import taxes, keeping prices low. LeRolland noted that without this advantage, the price differential between Shein and European competitors such as Primark and H&M could narrow, potentially affecting the company's market position.

Uncertainty also remains over the broader US-China trade environment. The tit-for-tat tariff measures between the two countries are currently paused, but ongoing negotiations could impact Shein's operations. As the company prepares for its debut, investors will be watching whether higher costs and regulatory challenges will impede its ability to deliver products quickly and affordably.