Shein to Pay $3.5 Billion to Pre-IPO Investors Amid Hong Kong Listing
Shein's Compensation Plan and IPO Details
By Yantoultra Ngui and Selena Li
Overview of Shein's Investor Payments
HONG KONG, Aug 24 (Reuters) - Online fast-fashion retailer Shein will pay up to $3.5 billion to selected existing investors — almost twice the fresh capital it is seeking in an IPO — to help compensate them for a sharp slide in its valuation, its prospectus showed on Monday.
Eligible Investors and Shareholder Protections
The investors entitled to the payments in cash and extra shares include entities linked to Boyu Capital, Tiger Global, General Atlantic, Thrive Capital, Mubadala, Brookfield and others, the filings showed.
They hold Shein's late-stage funding shares — Series pre-D, Series D and Series D plus preferred — which carry protections triggered by an IPO below the prices paid in earlier funding rounds.
Broader Group of Preferred Shareholders
The broader group of preferred shareholders also includes Sanabil Private Equity, Coatue, D1 Capital, DST Asia, Reliance Retail, Coppel Capital, and Claure Group.
The prospectus for its listing in Hong Kong does not disclose how much each investor will receive.
IPO Fundraising and Valuation
The payments are nearly double the up to HK$13.86 billion ($1.77 billion) that Shein aims to raise by selling about 280 million shares in its IPO, based on the top end of its indicated price range.
Shein's proposed IPO price of HK$47.60 to HK$49.50 per share would value the company at up to about $27 billion.
That is below the private valuations attached to the eligible funding rounds of $60.5 billion for the Series pre-D round in 2022, $98.2 billion for the Series D round later that year and $64 billion for the Series D plus round in 2023.
Details of Payment Structure
Shein said it could pay up to $2.2 billion in cash under the conversion adjustment protections, assuming the IPO is priced at the bottom of the range. It will also issue 19.6 million additional shares to eligible holders at no cost.
Separately, Shein also agreed to make about $1.33 billion in payments to holders of Series pre-D, D and D plus preferred shares.
Payment Timeline and Exclusions
That includes about $1.1 billion, payable in three instalments by March 31, June 30 and September 30. A further estimated $230.4 million, which accrues until the IPO closes, will be paid within 15 business days after IPO completion.
Shein said the payments will be funded from its own financial resources. Holders of Shein's older Series A, Series B, Series C and Series C plus preferred shares are not covered, the prospectus showed.
Additional Information
($1 = 7.8385 Hong Kong dollars)
(Reporting by Yantoultra Ngui and Selena Li; Editing by Sonali Paul)
