According to people familiar with the matter, Chinese fast fashion platform Shein has secretly submitted an application to the Securities and Exchange Commission (SEC) for listing in the United States. This could be one of the largest initial public offerings (IPO) in the US securities market in recent years.
Goldman Sachs, JPMorgan Chase and Morgan Stanley have been hired as lead underwriters for Shein's initial public offering, and IPO could take place as early as next year, according to people familiar with the matter. Shein, which was valued at $66 billion in its latest financing in May, is likely to seek a higher valuation in IPO.
Shein has upended the clothing industry in the past few years with $5 skirts and $9 jeans. The 11-year-old company is now one of the largest fashion brands in the world.
Over the past two years, the US IPO market has faced difficulties because of high interest rates and low-risk alternative investments, with few companies listing in the US.
The performance of most listed companies is not satisfactory. The biggest IPO this year is British chip designer Arm, which was valued at about $55 billion when it went public in September. Before that, the last high-profile IPO was Rivian in 2021, which was valued at about $77 billion.
IPO bankers and other advisers say they expect more listings next year. But they warn that the pace of recovery could be slow.
Shein achieved revenue of $23 billion and net profit of $800 million in 2022. The company told investors that it had recorded record revenues and profits in the first three quarters of this year. Shein sells goods to online shoppers in more than 150 countries, excluding China. The United States is its largest market.
In addition to online clothing retail, Shein has entered other areas, including the market as a third-party seller, competing with platforms such as Amazon and Temu, an international subsidiary of Chinese ecommerce pinduoduo.
In recent months, Shein has acquired a stake in retailer Forever 21, enabling it to sell goods in brick-and-mortar stores. In addition, Shein also acquired British women's fashion brand Missguided.
Shein moved its headquarters from Nanjing to Singapore in 2021, but its supply chain still relies heavily on China's Guangdong province, the country's main manufacturing hub.
To support its wide range of cheap clothing choices and respond to changing consumer tastes, Shein subcontracted thousands of factories and placed a small number of orders to test market demand before replenishing them as needed.
As its popularity soared, Shein's supply chain came under increasing scrutiny in the US. Members of Congress and the attorney general have called for an investigation into Shein's supply chain as a prerequisite for listing in the United States.
Shein has been restructuring its leadership in order to gain a foothold in the largest markets, particularly in the United States. Recently, the company hired Frances Townsend, a former Activision Blizzard executive who served in the administration and Justice Department of former President George W. Bush, as a senior adviser on a six-month contract.
Shein is also diversifying its supply chain, starting production in Turkey and Brazil outside China, and establishing a partnership with a major retailer in India.
In May, Shein raised $2 billion from investors, but Shein downgraded its valuation because of a sell-off in technology stocks and concerns about investor cost cuts. The year before the latest fundraising, Shein was valued at $100 billion, more than fast fashion brand Haum and Inditex, the parent company of Spanish fast fashion platform Zara combined.
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