Fast-fashion retailer Shein is actively negotiating with Boyu Capital, an Asian private equity firm, and UBS Group's asset management division to secure them as cornerstone investors for its Hong Kong Initial Public Offering (IPO). Tencent and private equity firm General Atlantic are also considering subscribing to shares. Shein has also approached E Fund Management, Greenwoods Asset Management, and Tiger Global to gauge their interest in becoming cornerstone investors. Many of these potential cornerstone investors are already existing shareholders of Shein, indicating a desire to double down on their support for the company.
Shein plans to reserve at least $400 million worth of shares for these cornerstone investors, who typically agree to a six-month lock-up period on their holdings in exchange for guaranteed allocations. The company is targeting to launch book-building on August 24, with a listing expected around September 1. The IPO aims to raise approximately $2 billion at a valuation ranging from $26 billion to $27 billion. If successful, this would position Shein as one of the largest consumer retail companies to list in Hong Kong in recent years.
This target valuation represents a significant decrease from Shein's peak valuation of nearly $100 billion in 2022. The adjusted valuation reflects increased competition in the global fast-fashion industry, a challenging macroeconomic environment, and a general re-evaluation of growth companies by capital markets. The IPO's pricing and subscription response will serve as an important indicator of market appetite for new-economy companies. Shein, headquartered in Singapore, initially considered listing in the United States but shifted its focus to Hong Kong amidst US-China tensions.
