Shein, a Chinese fast-fashion company, has submitted private paperwork for an initial public offering (IPO) with the US securities regulator. This could be one of the biggest US stock market listings in the last ten years.
During the COVID-19 pandemic, Shein gained a lot of popularity as more people turned to online shopping. Shein has hired JPMorgan Chase, Morgan Stanley, and Goldman Sachs to help with the IPO.
Shein raised $2 billion at a $66 billion valuation earlier this year, but is expected to go public at a valuation as high as $90 billion. As reported previously, the online fashion upstart, which has disrupted an industry that had been dominated by the likes of Zara and H&M. The initial public offering (IPO) filing was previously reported by The Wall Street Journal.
Shein’s Going Public and Money Matters
Shein has support from major investors like Abu Dhabi sovereign wealth fund Mubadala, venture capital group Sequoia China, and private equity group General Atlantic. It has chosen to go public with an initial public offering (IPO) around a year after securing funds at a valuation of approximately $64 billion. This is a decrease of one-third from the $100 billion valuation it achieved in a fundraising round in April 2022.
Despite the drop in valuation, a recent presentation revealed that Shein has ambitious plans to increase its revenues from $22.7 billion in the previous year to $58.5 billion by the year 2025.
The submission of the filing brings some optimism to bankers, suggesting that upcoming offerings in 2024 might create the excitement necessary to revive the IPO market after a challenging two-year period.
Recent activity includes the highly awaited $5 billion initial public offering of chip designer Arm and fashion shoemaker Birkenstock, which successfully raised $1.5 billion. While Arm’s value remains around its initial offering price, aligning with the broader market performance, Birkenstock has experienced a roughly 10 percent decrease.
As of the end of last month, only $19 billion had been raised in the United States this year, according to Dealogic. While this amount was double the total raised in the entire year of 2022, it fell significantly short of the $154 billion raised during the 2021 boom.
Shein, along with JPMorgan Chase, Morgan Stanley, and Goldman Sachs, chose not to provide comments.
From Chinese Startup to Global E-commerce Powerhouse
Founded by Chinese billionaire Sky Xu, also known as Chris Xu or Xu Yangtian, Shein has undergone a transformation over the past decade. Initially a rapidly growing company in Asia’s largest economy, it has evolved into a global business with a focus on expanding worldwide.
Its biggest market is now the United States, boasting a marketing team of over 500 people, a warehouse in Indiana with 1,400 employees, and around 1,800 partnerships with designers and artists.
Shein, renowned for its remarkably affordable prices, has recently secured the position of the second-most popular shopping site among teenagers, just behind Amazon, the e-commerce giant in the United States. This information comes from a Piper Sandler survey involving 9,193 individuals.
Shein’s expansion in the United States faces competition from Temu, a well-supported platform backed by Pinduoduo. Temu follows a similar model to Shein, shipping products directly from Chinese manufacturers to Western shoppers. Analysts at Goldman Sachs predict that Temu’s gross merchandise revenue, representing the total value of goods sold on its platform, will reach $34 billion by 2024.
Conclusion
Shein’s plan to go public is a big deal and could be one of the largest in the last ten years. This shows how Shein has grown from a small Chinese startup to a huge global online shopping company. Even though the company’s value has changed, their ambitious goal to make a lot of money shows they are confident. Recent market events and future offerings in 2024 give hope for a better market for companies going public.
