Shein eyes company valuation of around US$25 billion in Hong Kong IPO, sources say

HONG KONG - Fast-fashion giant Shein is targeting a company valuation of approximately US$25 billion (S$31.88 billion) for its upcoming Hong Kong IPO, according to three sources familiar with the situation. This is a significant decrease from the company's valuation of nearly US$100 billion in 2022, a decline attributed to difficult business conditions, the sources noted.

Shein, a Singapore-based company that sells items ranging from US$5 dresses to US$10 jeans to customers in around 160 countries, is set to unveil its long-awaited initial public offering later this week, as reported by Reuters. One of the sources mentioned that the firm, which was established in China in 2012, is eyeing a valuation range of US$25 billion to US$28 billion, based on the pricing band for the offering.

The sources, who did not want to be named as they were not authorized to speak to the media ahead of the public announcement of the deal terms, did not provide any further information.

A Shein spokesperson did not immediately respond to a Reuters request for comment. The latest valuation target is also lower than the initial range of US$30 billion to US$40 billion that Shein had set back in early August, following the start of investor meetings, as reported by Reuters on August 4th. Some investors, who attended IPO presentations or reviewed recent financial statements, have expressed doubts to Reuters about Shein's ability to achieve growth rates that justified its valuation of US$98.2 billion in a 2022 fundraising round.

A lower valuation could have a negative impact on Shein's financials, as per the IPO filing, the company would be obligated to issue additional shares to certain pre-IPO investors if the valuation falls below predetermined thresholds, according to Reuters.