Shein Prepares for Lower IPO Valuation Amidst Headwinds

Online fast-fashion giant Shein is expected to reduce its valuation for a potential London listing to approximately $50 billion, as per multiple sources familiar with the matter. This represents a 25% decrease from its 2023 fundraising valuation.

Shein's prospects have faced recent challenges after the Trump administration announced the closure of the "de minimis" duty exemption in the United States. This import rule had allowed the company to maintain low prices. Analysts speculate that its removal may impact Shein's profitability and raise product costs in the U.S., its primary market.

The ultimate IPO valuation will hinge on the impact of this exemption's termination on Shein's operations, as it may take time to assess its full consequences.

Shein and its competitor, Temu, collectively accounted for over 30% of packages shipped daily to the U.S. under the de minimis provision, according to a 2023 report by the U.S. congressional committee on China. This measure exempted shipments below $800 from import duties.

Shein, founded by Chinese entrepreneur Sky Xu, declined to comment on the matter.

The de minimis removal is part of President Trump's imposition of an additional 10% tariff on Chinese goods, escalating tensions between the world's largest economies. According to the congressional report, nearly half of all shipments under de minimis originate from China.

Shein had initially intended to go public in London during the first half of 2023, contingent on regulatory approvals from the U.K. and China.

Its previous fundraising round in 2023 valued the company at $66 billion, a notable decline from its peak valuation the year before. This latest IPO valuation target would represent Shein's second consecutive down round, indicating a company receiving a lower valuation during a funding round.

Shein's proposed IPO aligns with the UK government's efforts to drive economic growth and enhance London's appeal as a listing destination. A UK government source expressed continued interest in facilitating Shein's London IPO.

Shein submitted confidential IPO paperwork to the Financial Conduct Authority (FCA) in early June, but the regulator's approval process has taken longer than anticipated. A separate source indicated that the FCA has not yet made a decision on the IPO.

Market experts estimate it typically takes several months for the FCA to reach a verdict. Regulators also require approval from Chinese authorities, primarily the China Securities Regulatory Commission (CSRC).