Shein香港上市首日需求偏弱并一度破发10%，估值较2022年峰值大幅压缩

Shein’s unhappy IPO
Shein’s path to the public markets has never been easy. The Chinese-founded, Singapore-domiciled company originally wanted to list in New York and then London, but found the politics in both markets too hot to handle. Belatedly, it followed FT Alphaville’s recommendation of a Hong Kong listing. Along the way, it has lost value and a fair amount of its shine. Going public has been a bruising experience for Shein.
As MainFT reports today:
The company had priced shares at HK$48.56 ($6.19) in the middle of its range, raising HK$13.6bn ($1.7bn) and valuing Shein at just over $26bn.
That’s a far cry from the nearly $100bn valuation it commanded during its Series D private fundraising in 2022.
Even at that cut-price, the IPO appears to have generated a lukewarm response from institutional or retail investors. The international tranche was 1.6 times oversubscribed and Hong Kong retail 4.6 times. Those numbers sound respectable but they’re unimpressive for a high-profile Hong Kong listing where investors normally inflate demand by several orders of magnitude.
With cornerstone commitments covering only around 22 per cent of the IPO — the norm in Hong Kong is closer to 30-50 per cent, and Goldman Sachs’ China equity strategist told CNBC that cornerstones accounted for 40 per cent of new capital in Hong Kong IPOs last year — the shares struggled in the after-market, falling as much as 10 per cent on their debut before recovering to just below HK$48. It is not known whether or to what extent Goldman Sachs as IPO stabilisation manager bought shares to (legally) support the price today.
What is especially striking about the IPO is not simply that Shein chose to go public at around 75 per cent discount to its 2022 private valuation. It is that, even as the IPO raises capital to finance the next stage of the company’s growth, Shein may have to pay as much as $3.5bn in cash and shares to the private investors in Series Pre-D, Series D and Series D+ who backed it at valuations of $60.5bn, $98.2bn and $64bn, respectively. These investors negotiated anti-dilution and make-whole clauses that compensate them in the event of an IPO valuation below the levels at which they invested.
The result is something really weird: a share offering in which public investors are putting $1.7bn into the company while as much as twice that amount flows back, in cash and extra shares, to some of its earlier shareholders.
In any case, investors did not regard $26.5bn as a bargain. On some estimates, Shein was being offered at twice the 2026 price-to-earnings multiple of its competitor Temu’s parent PDD Holdings Inc. The justification was that 2026 is a trough year and that earnings should recover and normalise in 2027. Investors, however, were being asked to pay today for a recovery that has yet to happen. In other words, a big discount to the inflated 2022 valuation did not equate to a cheap price.
There were also concerns about the business itself. Shein does have an extraordinary operation. Investors rhapsodise about its technology, speed, supply chain and inventory management. Its gross margins and strong balance sheet have been praised by large money managers.
But some of the advantages that made Shein such an appealing investment are starting to unravel. Revenue growth has slowed sharply, profitability has come under pressure, and the de minimis customs exemption — which enabled Shein to ship individual parcels duty-free to western consumers — is being rescinded. The concern is that Shein will have to rely more on bulk imports and local warehousing, turning an asset-light business into something more capital-intensive akin to conventional retail.
Regulatory and compliance issues have also weighed on investor appetite. Shein has vehemently denied allegations concerning forced labour and environmental practices and invested heavily in third-party audits and ESG disclosure. But some investors remain unpersuaded and others just don’t want to burn the mental calories of figuring it out: for them, the issue is less whether the claims are true and more what their downside might be if regulators sanction the company. To give one example, Shein is under investigation under the EU’s Digital Services Act and faces potentially large fines for having sold childlike sex dolls and weapons on its third-party marketplace. For many fund managers, the company’s operations pose an unquantifiable, unhedgeable risk that they’d prefer not to deal with.
But the biggest concern may have revolved around the book of demand for the deal itself. No one wants to be a hero in any public offering; you want to make sure there’s a lot of demand, especially real unsatisfied demand that can translate into after-market buying. The $383mn of cornerstone commitments looked fairly light for an IPO of this size, particularly by Asian jumbo deal standards, and much of the demand came from existing shareholders. That is not a disaster but it pales as an endorsement compared to a group of “new” long-only investors clamouring for an allocation.
More tellingly, some investors with longstanding experience of Asian capital markets told me they had never received so many assurances from underwriters about the quality of an IPO book. The vigorous messaging and massaging may have irritated the market more than they soothed it: when you keep telling investors how wonderful the demand is, some of them inevitably start wondering why they need so much convincing. In Shakespearean terms, the lady doth protest too much.
None of this means Shein is doomed as a public company or that IPO buyers will lose money over the medium- or long-term. If margins recover and the company successfully adapts to the new customs environment, today’s valuation could eventually look like a steal. There is a genuine and impressive business underneath all the controversy. But the soggy after-market suggests that public-market investors wanted a bigger discount for taking on the risks.
Shein’s journey from a $100bn private-market darling to a $26.5bn lumpen-listed company is not the tale of a fallen angel. Rather, it’s a story about what happens when a hot private-market valuation negotiated among a relatively small group of investors plunges into the icy waters of public markets pricing.
Further reading:
— Shein’s London IPO flirtation (FTAV)
— The City of London losing its Shein (FTAV)