Online clothing retailer Shein plans to raise up to HK$13.86 billion ($1.77 billion) during its initial public offering in Hong Kong. The company is offering 280 million shares at a price of HK$47.60–49.50, implying a valuation of up to $27 billion. This is approximately 70% less than its peak of nearly $100 billion in 2022; trading is set to begin on 1 September.
Briefly about the main points
- Shein is offering 280 million shares at HK$47.60–49.50.
- The maximum amount to be raised is $1.77 billion.
- Anchor investors subscribed for securities worth approximately $383 million.
- The company expects revenue growth to be broadly in line with 1.1% in the first quarter.
- The final price will be announced on 31 August, and the auction will begin the following day.
The discount relative to the private valuation reflects weaker growth prospects
In 2023 and in April 2024, Shein was valued at $64 billion. Director of Asian Equity Research at Morningstar Lorraine Tan attributed the current decline to the fact that the company’s prospects have changed compared with the period when the idea IPO has only just emerged. In her view, global investors’ interest in the retailer may have waned.
At the upper end of the price range Shein It is estimated at approximately 0.7 times forecast revenue. This is higher than that of its European rival Zalando — around 0.4 — but lower than H&M at 1.1 and Inditex at 4.0. The company had previously abandoned plans to list on the New York and London stock exchanges.
Adjunct Professor at New York University School of Law Winston Ma believes that public investors are no longer factoring a scenario of hyper-rapid growth into the price. In his view, the market regards Shein as a mature cross-border platform that needs to protect its margins against tariffs, compliance costs and regulatory scrutiny in the US and China.
Anchor investors backed the placement; the co-founders will control 90% of the votes
Anchor investors, led by Boyu, Tiger Global and General Atlantic – all existing shareholders – have agreed to purchase shares in Shein for approximately $383 million. Tencent, Greenwoods, Taikang Life and UBS Asset Management will also participate in the placement.
Shein intends to allocate approximately 80% of the funds raised to technological development, its brand and global presence. At the same time, the company agreed to pay up to $3.5 billion in cash to certain investors who had purchased special shares in previous private funding rounds.
Shares sold in the IPO will carry ten times fewer voting rights than those held by the founders. Sky Yangtian Xu, Maggie Gu, Molly Miao and Tony Ren, the co-founders, will control 90% votes.
Revenue growth has slowed, and margins may fall
Shein expects revenue growth in the first half of 2026 to be roughly the same as in the first quarter, when it stood at 1.1%. The company forecasts that the operating margin will be slightly lower than the January–March level.
Shein cited new European import duties, pressure on prices and weaker demand in the Middle East linked to the war in Iran as some of the reasons. Executive Director of Research at uSMART Securities Diki Wong stated that he expects only moderate demand for subscriptions due to a slowdown in growth and regulatory pressure.
The company is also facing weaker underlying earnings, shrinking margins and tougher competition in the global e-commerce market. These factors are hampering its expansion in key markets.
US tariffs and investigations have increased the pressure on businesses
Following the abolition in the US of the de minimis exemption for online parcels valued at up to $800, Shein’s revenue in the US market fell by 14.3% in the first quarter. Chinese goods that the company sells or delivers to the US via the marketplace are now subject to tax at rates ranging from 10% to 87.5%.
Shein reported a quarterly loss of $99 million. It also recognised a fair value adjustment of $328 million on convertible preference shares following a change in accounting policy.
As at the end of March, the retailer had set aside approximately $80 million for ongoing legal and regulatory matters. These include an investigation by the US Federal Trade Commission, an audit under the EU Digital Services Act, and data privacy cases in France and Ireland. The acquisition of the US brand Everlane for $80 million in May is also under review by the US Committee on Foreign Investment, a source familiar with the matter told Reuters.
The final price will be determined on 31 August before the start of trading
Shein is set to announce the final placement price on 31 August, and trading is set to begin in Hong Kong the following day. If the maximum amount sought is raised, this will be the largest sale of new shares in the city in 2026. According to reports Reuters.
The offering will exceed the July IPO of autonomous driving technology developer Momenta Global, which raised $751 million. The outcome of the subscription will show whether the lower valuation will offset investors’ concerns regarding Shein’s growth rate and regulatory risks.
