Shein to pay up to $3.5 billion to select pre-IPO investors around Hong Kong listing

Online fast-fashion retailer Shein has agreed to pay up to $3.5 billion to selected existing investors to compensate them for a significant drop in the company's valuation, as per its Hong Kong IPO prospectus. These investors, affiliated with firms like Boyu Capital, Tiger Global, General Atlantic, and others, hold pre-IPO shares that trigger protections when the IPO price falls below their earlier investment levels.

The payments, made in cash and additional shares, are nearly double the amount Shein seeks to raise in its IPO, which could value the company at up to $27 billion, below its private valuations of $60.5 billion, $98.2 billion, and $64 billion for previous funding rounds. Shein will also provide 19.6 million free shares to eligible holders.

Payments to preferred shareholders amount to about $1.33 billion, with $1.1 billion spread over three installments and an additional $230.4 million due within 15 days of the IPO. However, Shein's older Series A, B, C, and C plus preferred shareholders are not eligible for these payments.