The world’s largest fast fashion company is aiming for a “secret” initial public offering in the United States

The world’s largest fast fashion company is aiming for a “secret” initial public offering in the United States

Since its inception in 2011, Shein has grown into one of the world’s largest fashion brands, competing with the likes of H&M, Uniqlo and Zara in key markets. Loyal customers and influencers posted videos on Tiktok showcasing the latest collections.

Every day, a few thousand new products are launched on the website – often for less than a hundred Danish kroner.

Secret stock exchange application

According to Chinese and international media, Shein has secretly filed for an issuance and IPO in the United States. This type of application is popular and often used by companies that need to keep information confidential for competitive reasons while also allowing the application to be modified.

Shen raised money from investors in the spring of 2022, worth about $100 billion. In the last capital increase in May, in which the company received $2 billion, the value was reduced by $36 billion (382 billion Norwegian kroner), to $64 billion.

Owners include Abu Dhabi’s Mubadala Investment Fund and Sequoia China Investment Fund, part of US venture capital group Sequoia. The company had sales of $23 billion in 2022 and profits of $800 million, according to the Wall Street Journal.

There was a drought problem in the US after interest rates started rising two years ago. In 2021, more than $330 billion was raised in issuance in the USA. So far this year, the amount is about $25 billion, according to Bloomberg calculations.

This should reverse in 2024 when peak interest rates are reached and inflation is still pointing lower. Shares of technology company Arm Holdings are trading at the same level as when they listed on the stock market in September. Instacart is down 25 percent.

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Companies of Chinese origin were absent. Ride-hailing company Didi listed on a US stock exchange in 2021 with a valuation of nearly $70 billion, but was delisted barely a year later in connection with a Chinese authorities crackdown on technology companies.

Chinese or Singaporean company?

The company is controversial, not least in the United States, which in a short time has become its largest single market. Shein is the second most popular shopping site for American teens — behind Amazon, according to a new survey by Piper Sandler.

US politicians have called for an investigation into Shein before its US IPO. This summer, a comprehensive plan was introduced a report To the House Select Committee on the Communist Party of China, where it concluded that there was a violation of US import regulations.

There is little information to be found about founder Skye (Chris) Shaw and his background. The company’s roots go back to China, but it moved its headquarters from Nanjing to Singapore two years ago. The company rejected allegations of forced labor in its supply chains, particularly from the use of cotton from the Xinjiang region.

If Shein can credibly say it is not a Chinese company, it will reduce sensitive feelings about this in the United States. At the same time, they can argue with Chinese authorities that security-related regulatory requirements do not apply to them, Shang Jinwei, a Columbia University professor, told CNBC in October.

Shein has established international management and moved customer data to US cloud services from Microsoft and Amazon. It has also made several acquisitions in the US in recent months and has partnered with Authentic Brands Group and real estate conglomerate Simon Property Group.

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US financial institutions Goldman Sachs, JP Morgan and Morgan Stanley have been appointed as facilitators for the upcoming issuance and initial public offering, which is expected to take place in 2024.

Onshore international expansion

While Shein is growing globally and becoming very popular with younger customers, many Asian competitors are emerging with a similar business model with lower prices and new collections all the time.

China’s Temu has overtaken Shein in Japan and South Korea, launching shopping apps this summer. This fall, it was the turn of Malaysia and the Philippines. The company, backed by Chinese conglomerate PDD Holdings, has long been on the radar of US financial institutions.

– Temu has in a short time expanded its international presence and we believe it is present in more than 40 countries. We continue to see opportunities for growth in the coming quarters, Goldman Sachs wrote in a report in October.

Goldman Sachs believes Temu has transactions worth more than $1 billion a month and expects continued growth. The company undertook major marketing campaigns in the United States in connection with the launch.

Temu lost significant amounts of money on the international launch. According to Chinese news site NOK 36, published by Wired, Temu loses between 30 and 35 percent of every order for American customers. A loss of 23 billion yuan (34 billion Norwegian kroner) is due in the budget this year.

Temu spends up to $10 million (more than NOK 100 million) a day on online advertising using Meta and Google, according to an analysis by Tencent.

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– If Temu expands to 47 countries in one year, but none of the countries have a clear timeline for when it will become profitable, that is very serious, says technology analyst Jeff Lee, who has a past as a director at the consulting company. Accenture, to Wired.(conditions)Copyright Dagens Næringsliv AS and/or our suppliers. We would like you to share our cases using links that lead directly to our pages. No copying or other use of all or part of the Content may be permitted except with written permission or as permitted by law. For more terms see here.

Hanisi Anenih

Hanisi Anenih

"Web specialist. Lifelong zombie maven. Coffee ninja. Hipster-friendly analyst."

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