Fashion company Shein has confidentially filed IPO in the United States, according to two sources familiar with the matter. Shein IPO is likely to be one of the most valuable China-founded companies to list in New York. Goldman Sachs, JPMorgan Chase and Morgan Stanley have been hired as lead underwriters on the Shein IPO, and Singapore-based company could launch its new share sale in 2024, the sources said.
Shein’s valuation
Shein’s valuation has not yet been determined nor is the size of the deal. As per earlier report this month Shein’s valuation was targeted up to $90 billion in the float.
Shein and the banks declined to comment.
The company founded in mainland China in 2012 was valued at more than $60 billion in a May fundraising, down by a third from a funding round last year.
Foraying on shaky grounds
The most valuable China-founded enterprise to go public in the United States so far is e-commerce giant Alibaba Group (9988.HK), which debuted in 2014 at a valuation of $231 billion.
The fast-fashion giant Shein’s move to go public in the U.S. comes as the market for IPOs is struggling to rebound after a string of lackluster stock market debuts.
In recent months there were four major IPOs, and three of them disappointed investors.
Shares of German sandal-maker Birkenstock (BIRK.N), grocery delivery app Instacart (CART.O) and chip designer Arm Holdings dropped below their IPO prices in the days that followed debuts, though Arm’s shares are now trading above that price.
U.S. IPOs have raised about $23.64 billion so far this year, compared with $21.3 billion during the same period last year. In 2021, the comparable number was $300 billion when the IPO market was close to its peak.
Keeping a low-profile
Shein had started low-profile conversations with potential investors for the float in the U.S., seeking to line up some big names as new shareholders going into the IPO, said one of the sources, who declined to be identified due to confidentiality restraints.
It is not immediately clear if the company has filed with the China Securities Regulatory Commission (CSRC) for the U.S. IPO. Chinese companies need to receive clearance from the regulator before going ahead with their offshore offerings.
“As it is a significant and highly disruptive player in the retail space, Shein will attract a lot of investor interest,” said GlobalData managing director Neil Saunders.
In August, Republican attorneys general from 16 U.S. states asked the Securities and Exchange Commission to audit Shein’s supply chain for the alleged use of forced labor ahead of its potential IPO.
As reported previously the company has “zero tolerance for forced labor”.
Shein IPO timing
Known for its $10 tops and $5 biker shorts, Shein ships the majority of its products directly from China to shoppers by air in individually addressed packages.
The direct shipping strategy helped the firm avoid unsold inventory piling up in warehouses and avoid import tax in the U.S., one of its biggest markets, as it allows Shein to take advantage of the “de minimis” provision that exempts cheap products from tariffs.
Fast fashion retailers have been gaining popularity in the United States, with Shein taking away market share from the likes of Gap (GPS.N) as shoppers look for fresher styles.
In August, Shein partnered with SPARC Group, a joint venture between Forever 21 owner Authentic Brands (AUTH.N) and mall operator Simon Property (SPG.N), in an attempt to expand their market reach.
Shein along with Temu.com, however, have not been able to turn shopper visits into sales and are far behind market leader Amazon.com (AMZN.O) on that score.
Shein’s confidential U.S. IPO filing was first reported by China’s Shanghai Securities Journal last week.
What will be Shein’s IPO date?
The Shein IPO date is yet not fixed and IPO could happen sometime in 2024, as per report.
What will be projected Shein’s stock price?
Shein’s stock price won’t be known until the IPO is closer at hand and its underwriters Goldman Sachs, JPMorgan Chase and Morgan Stanley set Shein’s stock price, based partly on demand from investors as well as the company’s financials, such as its profitability and growth prospects.
