China's Shein shelves U.S IPO plan again due to uncertain markets -sources

3 minute read

A keyboard and a shopping cart are seen in front of a displayed Shein logo in this illustration picture taken October 13, 2020. REUTERS/Dado Ruvic/Illustration

Register now for FREE unlimited access to Reuters.com

SYDNEY, Feb 25 (Reuters) - Chinese fashion retailer Shein's plan to list in the United States has been put on hold due to volatile capital markets amid Russia's attack on Ukraine, said two people with direct knowledge of the matter.

Reuters reported last month that Shein had revived plans to list in New York this year and its founder was considering a citizenship change to bypass proposed tougher rules for offshore initial public offerings (IPOs) in China. read more

The stock market debut plan has now been put on hold for the second time as a result of the sharp market volatility over the past month that has been exacerbated in recent days by the invasion of Ukraine, those people said.

Register now for FREE unlimited access to Reuters.com

Investors rediscovered their risk appetite overnight after some initial sharp losses earlier on Thursday, as they weighed the longer-term impact of tough Western sanctions against Russia after it unleashed troops, tanks and missiles on Ukraine.

But some analysts worry any rallies might be fleeting. read more

Shein is currently in a strong financial position, one of the sources said, and the company did not want to risk its reputation by pushing ahead with a deal in uncertain markets.

The company has not considered whether to revive its listing plans again later this year, the source added.

Shein has no plans for an IPO, a company spokesperson said, without providing further details.

The sources declined to be identified as they were not authorised to speak to the media.

The impact of the Ukraine crisis on dealmaking has been muted thus far, as companies and their advisers try to assess how long it may last and what its outcome will be, investment bankers said.

Mergers and acquisitions in advanced stages of negotiations are likely to press on, the bankers said. Were the market volatility to continue, however, companies at an earlier stage of planning could start to abandon deals, they added. Protracted volatility would also put stock market debuts on hold, according to the bankers.

Exposure to Russia and Ukraine will now be scrutinized by dealmakers. For example, technology companies with programmers or other employees based in Ukraine or neighboring countries may struggle to go public or be acquired, the bankers said.

LONG CONTEMPLATED IPO

Shein, which has grown into one of the world's largest online fashion marketplaces since its 2008 launch in Nanjing, was valued at about $50 billion in early 2021. It produces clothing in China to sell online in the United States, its biggest market, Europe and Asia but does not sell in China.

It first started preparing for a U.S. IPO about two years ago, but shelved the plan partly due to unpredictable markets amid rising U.S.-China tensions, sources have said.

It was not clear how much the company was looking to raise from its New York debut.

The planned IPO would have been the first major U.S. equity deal by a Chinese company since regulators in the world's second-largest economy moved to tighten oversight of such listings in July.

Shein founder Chris Xu was eyeing Singapore citizenship as part of the IPO process partly to bypass China's new and tougher rules on overseas listings, Reuters reported last month.

The company, which has driven its rapid rise by targeting the social media-savvy "Gen Z" generation, has also been aggressively expanding its Singapore office, Reuters reported last week. read more

(This story refiles to remove extraneous word from headline)

Register now for FREE unlimited access to Reuters.com
Reporting by Scott Murdoch in Sydney and Chen Lin in Singapore Additional reporting by David French, Chibuike Oguh and Greg Roumeliotis Editing by Sumeet Chatterjee, Kim Coghill, Muralikumar Anantharaman and Tomasz Janowski

Our Standards: The Thomson Reuters Trust Principles.

Thomson Reuters

Scott Murdoch has been a journalist for more than two decades working for Thomson Reuters and News Corp in Australia. He has specialised in financial journalism for most of his career and covers equity and debt capital markets across Asia based in Hong Kong.