Shein is being pitched to potential investors at a valuation below $30bn as it pursues a long-delayed initial public offering in Hong Kong, after Chinese regulators approved the fast-fashion retailer's listing application last month. The approval clears a route to market that has been more than four years in the making, following earlier attempts to list in New York and London that were derailed by political opposition and scrutiny of Shein's Chinese supply chain.
The sub-$30bn pitch represents a fall of roughly 70 per cent from the valuation Shein reached at its peak. The company was valued at more than $100bn following a private fundraising round in 2022. Internally, Shein had set a target valuation of $30bn for the listing. Investor interest is said to be clustering in the mid-to-high twenty-billion-dollar range. Should the IPO ultimately price below Shein's target, the company may need to return to its existing investors for consultation before proceeding, according to information understood in connection with the process.
Goldman Sachs, Morgan Stanley and JPMorgan are the three lead banks on the transaction. Goldman Sachs and Morgan Stanley declined to comment on the process, while JPMorgan did not respond to a request for comment. Shein, which manufactures in China but is headquartered in Singapore, also did not respond to a request for comment. Separately, indications from the IPO roadshow suggest Shein may face difficulty securing commitments from major Chinese institutional investors.
The valuation reset follows a deterioration in Shein's underlying financial performance. The company reported a quarterly net loss of $99mn for the first quarter, and flagged the risk posed by US and EU trade tensions in a filing made to Hong Kong's exchange. Annual net profit, which peaked at $3.4bn in 2024, fell to $2bn last year. Over the same period, net profit margins narrowed from 8.7 per cent to 4.9 per cent.
The compression in valuation and margin has coincided with the introduction of US tariffs and the removal of tax exemptions that had previously allowed Shein to ship customer orders into the US and EU without paying import duties. Competition has also intensified from a rival that has replicated Shein's direct-to-consumer shipping model, while air freight costs have risen.
The prospect of pricing below Shein's internal target carries a direct procedural consequence: a requirement to consult existing investors before proceeding. The uncertainty flagged around demand from major Chinese institutional investors, set against narrowing margins and a first-quarter net loss, forms the backdrop against which the final IPO valuation and terms will be determined.
