Chinese IPOs In the U.S. Are Still A Thing
Shein, the global online fashion company originating from China, has confidentially submitted documents for a U.S. initial public offering (IPO), potentially one of the most significant in recent years. Goldman Sachs, JPMorgan Chase, and Morgan Stanley are enlisted as lead underwriters, targeting a potential IPO in 2024, according to insiders.
- Having relocated its headquarters to Singapore, Shein, valued at approximately $66 billion in a fundraising round in May, is expected to seek an even higher valuation in its IPO.
- The disruptive 11-year-old company, renowned for its affordable and trendy clothing, has become one of the world's largest fashion brands.
Though IPO Market
Chinese media previously reported on Shein's confidential filing, as the company has navigated the challenges of the U.S. IPO market, which has seen limited activity in recent years. Notable IPOs, like that of British chip designer Arm Holdings, have faced difficulties, while Shein recorded $23 billion in revenue and $800 million in net profit in 2022, showcasing robust financial performance.
- SEC rules permit companies to keep their listing documents private before their IPOs. Shein, which operates in over 150 countries, excluding China, plans to disclose these documents in the weeks leading up to its offering, shedding light on its financials.
- Beyond its stronghold in online clothing retail, Shein has expanded its reach, venturing into areas such as third-party seller marketplaces, competing with giants like Amazon and Temu. Recent strategic moves include acquiring a stake in the operator of Forever 21 and purchasing the British women's fashion brand Missguided.
A potential U.S. stock listing positions Shein as a significant offering, possibly the most substantial from a Chinese-origin company since Didi Global's 2021 IPO. Notably, Shein shifted its headquarters to Singapore in 2021, a move that could be advantageous amid rising geopolitical tensions.
Supply Chain Scrutiny And Leadership Changes
While rooted in China's manufacturing hub, Guangdong province, Shein's supply chain has faced scrutiny, particularly regarding the sourcing of cotton from Xinjiang. The company has asserted a "zero-tolerance policy" for forced labor, addressing concerns raised by U.S. lawmakers and attorneys general.
- In its quest for market dominance, Shein is revamping leadership, hiring individuals like Frances Townsend, a former Activision Blizzard executive with experience in the U.S. government.
- The company is also diversifying its supply chain by establishing manufacturing operations in Turkey and Brazil, along with a partnership with a major Indian retailer.
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