US Markets
Tuesday, November 28th, 2023 2:55 pm EDT
Key Points
- Shein’s Confidential IPO Filing and Valuation:
- Shein, the Chinese-founded fast-fashion giant, has confidentially filed for an initial public offering (IPO) in the U.S. with a last valuation of $66 billion. The company aims to expand its global reach through this IPO, potentially entering public markets as early as 2024. The actual current valuation is uncertain and has been a subject of debate among Shein and its advisors.
- Challenges and Controversies Surrounding Shein:
- Despite its meteoric rise, Shein has faced numerous challenges, including accusations of using forced labor in its supply chain, violating labor laws, environmental harm, and stealing designs from independent artists. The company is under investigation by the House Select Committee on the Chinese Communist Party, and 16 Republican attorneys general have urged the SEC to ensure compliance with labor standards before Shein is allowed to trade in the U.S. Marcelo Claure, Shein’s group vice chair, has claimed cooperation with lawmakers, but the company has acknowledged instances of forced labor in its supply chain and is taking corrective measures.
- Strategic Moves and Efforts for U.S. IPO:
- Shein has undertaken strategic initiatives to prepare for its U.S. IPO, including acquisitions and partnerships. The acquisition of a one-third stake in Sparc Group, a joint venture involving Authentic Brands Group and Simon Property Group, is seen as a move to build a strong U.S. alliance. Additionally, Shein has partnered with former rival Forever 21 for a co-branded clothing line, aiming to design, manufacture, and distribute clothes primarily on its website. While working to overcome negative perceptions, Shein’s CEO, Sky Xu, remains a mysterious figure who does not speak publicly, a departure from the transparency expected in publicly traded U.S. companies. Goldman Sachs, JPMorgan, and Morgan Stanley are reported to be the lead underwriters for Shein’s IPO.
Shein, the Chinese-founded fast-fashion giant, has confidentially filed for an initial public offering (IPO) in the United States, as reported by CNBC. With a last valuation standing at $66 billion, the company is eyeing an expansion of its global footprint. The anticipated IPO, potentially taking place in 2024, aims to capitalize on the brand’s popularity that surged in recent years due to its fashion-forward designs, extensive product range, and competitive pricing.
However, the current valuation of Shein is a subject of contention among the company and its advisors. The confidential filing, a standard procedure, enables Shein to communicate privately with the U.S. Securities and Exchange Commission (SEC), allowing adjustments to be made before public disclosure. Over the coming months, the company is expected to fine-tune its paperwork and address queries from the SEC before making its filing public.
Despite Shein’s meteoric rise, it has encountered various challenges, including allegations of forced labor, violations of labor laws, environmental concerns, and accusations of design theft from independent artists. The company is under investigation by the House Select Committee on the Chinese Communist Party, and scrutiny over its ties to Beijing has prompted calls from lawmakers, including 16 Republican attorneys general, urging the SEC to ensure compliance with labor standards before Shein can trade in the U.S.
Marcelo Claure, Shein’s group vice chair and former CEO of SoftBank, asserted in October that the company is cooperating with lawmakers, vehemently denying the existence of forced labor in Shein factories. However, Shein has admitted to instances of forced labor in its supply chain and is taking corrective measures.
Shein’s journey from a relatively unknown Chinese retailer to a global giant headquartered in Singapore has been marked by secrecy. Only recently has the company become more public-facing, possibly in preparation for the U.S. IPO. The appointment of former Bear Stearns investment banker Donald Tang as executive chair and public face, along with orchestrated pop-up events, influencer visits to Chinese factories, and high-profile parties, all suggest a strategic shift in Shein’s approach.
In a significant move, Shein acquired a one-third stake in Sparc Group, a joint venture featuring brand management firm Authentic Brands Group and mall owner Simon Property Group. This partnership, coupled with collaboration with former rival Forever 21 for a co-branded clothing line, is seen as an effort to build credibility and establish a strong U.S. presence.
Despite these strategic maneuvers, Shein faces obstacles in winning the trust of U.S. regulators. The mysterious profile of CEO Sky Xu, who rarely speaks publicly or gives interviews, contrasts with the transparency expected from publicly traded companies in the U.S. In addition to these challenges, it remains undisclosed whether Xu is still a Chinese citizen.
Goldman Sachs, JPMorgan, and Morgan Stanley are reported to be the lead underwriters for Shein’s IPO. The company, as well as the mentioned financial institutions, declined to comment on the reports. Earlier on the same day, Chinese media had already reported on Shein’s confidential filing.
For the full original article on CNBC, please click here: https://www.cnbc.com/2023/11/27/shein-files-for-us-ipo-as-fast-fashion-giant-looks-to-expand-its-global-reach.html
