Shein’s $1.8 Billion Hong Kong IPO Draws Strong Demand Despite Challenges
Shein’s Hong Kong IPO: Investor Interest Amid Regulatory and Market Hurdles
By Scott Murdoch and Kane Wu
IPO Details and Valuation
HONG KONG, Aug 25 (Reuters) - Online fast-fashion retailer Shein's Hong Kong IPO book to raise up to $1.8 billion has been fully covered by investor demand, two sources said, bringing it closer to its long-awaited market debut amid growing business and regulatory challenges.
Shein launched its new share sale on Monday, valuing the company at up to $27 billion.
Investor Participation
Investor orders for the offering have come from a number of existing shareholders, China-focused and multi-strategy funds, said the sources with knowledge of the matter. They declined to be named as they were not authorised to speak to the media.
A spokesperson for Shein did not immediately respond to a Reuters request for comment.
Share Sale Structure
The Singapore-based, China-founded company is selling 280 million shares at HK$47.60 to HK$49.50 a share in the IPO, according to the company's filings, which would raise $1.8 billion at the top end.
The final price of the shares is due to be unveiled on Monday and the stock is scheduled to begin trading on Hong Kong's stock exchange on September 1, according to the company filings.
Shein's valuation in the IPO is nearly 70% below the nearly $100 billion private market valuation that it reached in 2022.
Business Model and Market Presence
The company is best known for selling $5 dresses and $10 jeans to shoppers in about 160 countries.
Growth Prospects and Market Challenges
Analysts said growing headwinds in Shein's core markets - the U.S. and Europe - could weigh on the company's growth prospects.
Regulatory Scrutiny and ESG Concerns
Shein's IPO comes as the company works to address environmental, social and governance concerns that have triggered regulatory investigations and fines in several countries, complicating previous attempts to list its shares.
Previous Listing Attempts
Over the past four years, the company tried to list in New York and London, but faced investor and political criticism over its environmental, labour and governance standards.
Ongoing Investigations
Shein is under investigation by the European Commission and the U.S. Federal Trade Commission. Previous probes resulted in fines in France over alleged fake discounts and in Italy over greenwashing as fast fashion purveyors come under increased scrutiny from regulators. Greenwashing refers to the practice of overstating the environmental benefits of an organization.
Company Response
A Shein spokesperson said the firm maintained "high standards of corporate governance, transparency and accountability."
(Reporting by Scott Murdoch in Sydney and Kane Wu in Hong Kong; Editing by Sumeet Chatterjee, Jacqueline Wong and Thomas Derpinghaus)
