HONG KONG, Aug 24 (Reuters) – Online fast-fashion retailer Shein’s valuation has crumpled by about 70% from a private market peak near $100 billion four years ago, as it looks to raise up to HK$13.86 billion ($1.77 billion) in a Hong Kong IPO launched on Monday.
Shein is selling 280 million shares priced between HK$47.60 and HK$49.50, valuing it at close to $27 billion at the top of the range. The valuation has dropped from private fundraising rounds that valued it at $98.2 billion in 2022.
Here are comments from analysts.
KENNY NG, STRATEGIST AT CHINA EVERBRIGHT SECURITIES INTERNATIONAL, HONG KONG:
“Shein launched … with a valuation that has fallen significantly compared to earlier years. I believe this primarily reflects that its growth has faced greater challenges recently.
“In my view, these challenges stem from three main areas: trade protectionism (tariffs) across different countries or regions, downward pressure on the global economy affecting consumer sentiment, and fierce competition within the industry.
“I believe the fact that pre-IPO investors entered at a higher valuation than the current IPO offering price will weigh on the overall investment sentiment for Shein’s ongoing bookbuilding.”
WINSTON MA, PROFESSOR AT NYU SCHOOL OF LAW AND FORMER NORTH AMERICA HEAD OF CHINA’S SOVEREIGN WEALTH FUND CIC:
“Shein’s $27 billion valuation targets a new equilibrium.
“Public investors are no longer paying for hyper-growth; they are underwriting a mature cross-border platform that must now defend its profit margins against trade tariffs, higher compliance costs, and regulatory scrutiny in both US and China.
“Also on valuation, Shein is experiencing its ‘Zoom moment.’ Just like Zoom, Shein’s COVID-era business model is now being tested by the new market, where investors have aggressively rotated into AI stack-related investments.
“Robust demand would affirm Hong Kong’s role as the pragmatic listing venue for large consumer and e-commerce names that face hurdles elsewhere.”
KENNETH GOH, DIRECTOR OF PRIVATE WEALTH MANAGEMENT, UOB KAY HIAN, SINGAPORE:
“Shein is selling equity in Hong Kong while the hyperscalers borrow in global investment grade credit. Direct crowding out is hard to argue.
“Hong Kong and the mainland have seen two listings this month worth comparing.
“Unitree is raising about $900 million at a $9 billion valuation and says its retail tranche was more than 8,000 times covered. Shein is raising $1.77 billion with cornerstones drawn largely from its own existing shareholders.
“Investors who attended the presentations said Shein leaned on operational technology without the growth story now attracting capital to AI-linked businesses.
“The scarce resource is willingness to underwrite something that has to be explained from scratch.”
(Reporting by Yantoultra Ngui in Hong Kong and Rae Wee in Singapore; Editing by Sumeet Chatterjee and Clarence Fernandez)
Comments