Shein’s Hong Kong IPO cleared by China’s securities regulator

China’s securities regulator has registered the Hong Kong IPO plan from Shein Global Holdings Ltd., clearing a key regulatory hurdle for the fast-fashion company to list. The China Securities Regulatory Commission’s (CSRC) approval caps a drawn-out process that saw Shein first try to list in the New York and then in London, before abandoning both efforts after running into political resistance.

Shein plans to sell up to 342 million shares in the Hong Kong listing, according to the CSRC’s registration notice posted on its website Friday. Such registration means the regulator has vetted the plan and given its formal approval, as required for all Chinese companies listing overseas, including in Hong Kong.

Shein rose to fame by selling cheap Chinese-made clothing to mostly Western buyers at very low prices. But the company came under scrutiny over allegations of abusive labor practices at some of its factories, and also for exploiting a loophole in U.S. and European law that allowed low-value parcels mailed from abroad to enter those markets duty-free. The U.S. has closed that loophole, and the EU is in the process of taking similar steps.

Following the CSRC’s approval, Shein is likely to formally file a preliminary prospectus for its IPO with the Hong Kong Stock Exchange in the next few weeks. The company was valued at $66 billion at the time of its last funding in May 2023. But it may target a significantly lower valuation of $40 billion to $50 billion in the upcoming IPO, a knowledgeable source told Reuters, adding the deal could raise several billion dollars.

By Doug Young

To subscribe to Bamboo Works weekly free newsletter, click here