Post by : Badri Ariffin

Online fast-fashion retailer Shein is targeting a valuation of about $25 billion to $28 billion for its planned initial public offering (IPO) in Hong Kong, according to three people familiar with the matter.

The latest target represents a sharp decline from the nearly $100 billion valuation the company reached four years ago, as Shein faces more challenging business conditions and slower growth.

The Singapore-headquartered company is preparing to launch its long-awaited Hong Kong IPO later this week, according to Reuters.

Valuation Falls From Earlier IPO Target

One of the sources said Shein was considering a valuation of between $25 billion and $28 billion, based on the marketing price range for the share offering.

The sources did not want to be identified because they were not authorised to speak publicly before the IPO terms are announced. Shein did not immediately respond to a request for comment.

The latest valuation target is also below the $30 billion-$40 billion range Shein was seeking at the start of August. The company had begun investor meetings around that time as it prepared for the Hong Kong listing.

Shein's Valuation Compared With 2022

Shein was valued at $98.2 billion in a 2022 fundraising round, but some investors who attended the company's IPO presentations or reviewed its recent financial statements have questioned whether the retailer can return to the growth rates that supported that valuation.

The company was founded in China in 2012 and is now headquartered in Singapore. It is known for selling low-priced fashion products, including dresses priced at around $5 and jeans costing about $10, to customers in roughly 160 countries.

Lower IPO Valuation Could Affect Existing Investors

A lower valuation could also have an impact on Shein's financial position under the terms of its IPO filing.

If the company's valuation falls below certain agreed thresholds, Shein would be required to issue additional shares to some pre-IPO investors, according to the filing.

The proposed Hong Kong listing therefore comes as Shein seeks to complete an IPO at a valuation significantly below the level it achieved during its 2022 fundraising round.

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