Fast-fashion giant Shein is set to lower its valuation to approximately $50 billion in a potential London initial public offering (IPO), according to three sources familiar with the matter.
This marks a nearly 25% reduction from its 2023 fundraising valuation, as the company faces increasing challenges.
Impact of U.S. import policy changes
Shein’s business outlook has taken a hit following the Trump administration’s decision to eliminate the "de minimis" duty exemption in the United States. This exemption had allowed the company to import products duty-free under a specific value threshold, helping to keep costs low. With its removal, analysts and industry experts warn that Shein may face rising costs and potential profitability declines, particularly in its largest market, the U.S.
One source indicated that the ultimate IPO valuation would depend on how the removal of the de minimis rule affects Shein's operations. As the policy change has only recently taken effect, the full impact remains uncertain.
Shein and competitor Temu reportedly accounted for over 30% of all daily shipments to the U.S. under the de minimis rule, according to a 2023 report by the U.S. congressional committee on China. The exemption had allowed shipments under $800 to bypass import duties.
Regulatory hurdles and IPO delays
Shein, founded by Chinese entrepreneur Sky Xu, has not responded to requests for comment regarding its IPO plans. The company had initially planned to go public in London in the first half of 2024, pending regulatory approvals from both the U.K. and China.
Sources previously told Reuters that Shein's last funding round in 2023 valued the company at $66 billion, already a significant drop from its peak valuation. If Shein proceeds with its IPO at the revised $50 billion valuation, it would mark its second consecutive down round—a situation in which a company’s valuation is reduced in a subsequent funding event.
The U.K. government has been advocating for a more pro-business regulatory environment and has overhauled listing rules to attract major companies like Shein. A government source, speaking on condition of anonymity, confirmed continued interest in Shein’s potential London listing.
Regulatory approval process in the U.K. and China
Shein confidentially submitted IPO filings with Britain’s Financial Conduct Authority (FCA) in early June 2023, but regulatory approval has taken longer than usual. The FCA has yet to make a final decision, and a spokesperson for the agency previously stated that IPO approval timelines vary depending on individual cases.
In addition to U.K. regulatory approval, Shein must also secure authorization from Chinese regulators, including the China Securities Regulatory Commission (CSRC), before moving forward with its listing.
Shift from U.S. to London listing
Shein initially pursued a U.S. IPO but withdrew plans following political opposition. Concerns from U.S. lawmakers over alleged labor violations and ongoing legal disputes with competitors contributed to the decision to pivot to London.
As Shein navigates regulatory challenges and evolving trade policies, the outcome of its IPO remains uncertain. However, its decision to lower its valuation signals a strategic move to attract investors amid a shifting market landscape. Photo by Raysonho @ Open Grid Scheduler / Scalable Grid Engine, Wikimedia commons.