Chinese online fashion retailer Shein is building out its Irish operation as it eyes a US listing in the second half of this year, according to sources. The business is set to raise about $2 billion (€1.9 billion) in a new funding round this month, they added.
UAE’s sovereign wealth fund Mubadala is a major investor in this round as are existing investors, private-equity firm General Atlantic (GA) and venture capital group Sequoia Capital China, said two of the people and a separate person with knowledge of the matter.
Tiger Global Management became a new investor, said the first two people.
Shein cut its valuation to $64 billion in this fundraising, down by a third from a funding round a year ago, according to six sources with knowledge of the matter.
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The company last month held initial talks with several investment banks to pick lead bookrunners for the US initial public offering (IPO), said two of the sources with direct knowledge of the plans.
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The float, if successful, would be one of the biggest worldwide this year and a test of US investor appetite for Chinese companies amid volatile capital markets and geopolitical tensions.
All sources declined to be identified as the information was confidential.
Shein said it did not currently have plans for an IPO and declined to comment further. Mubadala and Sequoia China declined to comment. GA and Tiger did not immediately respond to requests for comment.
Investors who participated in Shein's 2022 fundraising will adjust the value of the stakes they bought earlier to reflect the company's current valuation, two of the sources said.
Shein, founded by Chinese entrepreneur Chris Xu, has grown into one of the world’s largest online fashion marketplaces since its 2008 launch in Nanjing. It produces clothing in China to sell online in the US, Europe and Asia, selling items such as $10 dresses and $5 tops.
It had attempted to list in the US in 2020, but shelved the plan partly due to unpredictable markets amid rising US-China tensions, sources have previously said.
At the time, the company had hired Bank of America, Goldman Sachs and JPMorgan to work on the IPO but has decided to reselect its advisers, said three of the sources.
Shein’s IPO plans are set to be closely watched after China last month introduced new rules laying out how companies can list overseas. Those rules followed a regulatory crackdown that has slowed US listings by Chinese companies to a trickle.
Chinese companies raised only some $230 million in US listings last year, a massive drop from $12.9 billion in 2021, according to Refinitiv data.
It was not immediately clear if Shein is planning to officially seek Chinese regulatory approval for its IPO.
In recent years the company has made a Singapore firm its de facto holding company and Mr Xu has also become a permanent resident of the city state, Reuters reported last year. The moves were designed so that Shein could bypass seeking Chinese regulatory approval for the listing, sources have previously said.
Shein is expanding in Europe as it builds out its team in Ireland, said one of the sources and two separate people with knowledge of its business plans. The group has a Dublin office.
It has started manufacturing in Turkey and will open a large facility in Poland as part of its European expansion plan, they added. – Reuters
