Investors in fashion retailer Shein are reportedly selling discounted shares.
Those private-market deals value Shein at as low as $45 billion, Bloomberg News reported Thursday (Jan. 25), noting this shows a drop in enthusiasm for the company ahead of its much-anticipated initial public offering (IPO).
The report cites sources familiar with the matter who say shareholders offered stock at valuations ranging from $45 billion to $55 billion late last year, down from the $66 billion Shein reached in a May funding round.
Even then, the sources say, those sellers struggled to find buyers, which raises the threat of an even steeper loss in value.
The report says these offers are a “useful barometer” of investor sentiment, and indicate a growing gap between market appetite and Shein’s hope for a $90 billion IPO. The company filed to go public in November of last year.
PYMNTS has contacted Shein for comment but has not yet received a reply.
The news comes almost two weeks after a report that Shein — founded in China and now based in Singapore — was seeking approval from the China Securities Regulatory Commission (CSRC) to go public.
As covered here, that decision could put a kink in Shein’s plans to go public, because of a lengthy approval process with various Chinese regulators for companies seeking to list overseas and the potential for increased scrutiny in the U.S.
CSRC rules say that if a company generates 50% or more of its operating revenue, profit, total assets or net assets in China and conducts its main business in the country, it would be considered a Chinese company and subject to the new rules.
Because Shein relies on China for its supply chain and manufacturing needs, it could fall under the CSRC’s purview.
And as PYMNTS wrote last year, the company faces other roadblocks, noting “certain lawmakers have urged the SEC to audit Shein before permitting its public stock offering.”
As part of its filing requirements, the company will need to address its supply chain and operational aspects, leading to increased scrutiny.
And the U.S.-China Economic Security and Review Commission has raised concerns about “controversial” business practices by Shein and its competitor, Temu. The commission has “portrayed their expansion as a case study of Chinese eCommerce platforms skillfully navigating regulations to establish a dominant presence in the U.S. market,” PYMNTS wrote.
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