Shein will cut its valuation to approximately $50,000 million at its expected exit to the stock market in London, as reported by Reuters. This figure represents almost a quarter less than the valuation obtained by the company in its 2023 financing round.
The Chinese company has been affected in recent days after the announcement of US President Donald Trump to eliminate the exemption of “minimis” tariffs in the United States. This regulation allowed the company to maintain its competitive prices. The elimination of this benefit could significantly affect Shein’s profitability and increase the prices of its products in its main market, according to analysts in the sector.
The disposition of “minimis” exempted tariffs to shipments with a value of less than $800. According to a report by the US Congress of 2023, Shein and its competitor Temu represented more than 30% of all packages sent daily to the US under this exemption. The Trump administration measure is part of an additional 10% tariff imposed on China, in what has been described as a “opening salvo” in the confrontation between the two main economies of the world.
Challenges for the IPO
The eventual assessment of the Shein Initial Public Offer (IPO) will depend on the impact that the “minimis” level has on its business, sources familiar with the matter have indicated. This reduction in the assessment marks the second consecutive downward round for Shein, after in 2023 its value fell to $66,000 million, a third less than its peak of the previous year. The exact reasons for this decrease have not been revealed.
The Listing Process in London
Shein presented confidential documents before the Financial Conduct Authority (FCA) of the United Kingdom at the beginning of last June, according to nearby sources. However, the British regulator has taken more than expected to approve the price, which has generated uncertainty in the process. Although the FCA has not made a definitive decision, experts indicate that this type of evaluations may take several months to complete.
The British government has shown interest in attracting Shein to the London Stock Exchange as part of its efforts to make the United Kingdom Securities Market more attractive to global companies. Nevertheless, the price will also need the approval of Chinese regulators, in particular of the Securities Regulatory Commission of China (CSRC), adding another layer of complexity to the process.
Shein, founded by Chinese entrepreneur Sky Xu, has become a reference in rapid fashion globally thanks to its business model based on agile production and direct sale to consumers through digital platforms. However, its previous attempt to go public in the US was frustrated by the opposition of legislators concerned about alleged deficient labor practices and demands of the competition.
At the moment, Shein has not issued official comments on the situation.