Exclusive: China fashion retailer Shein to file confidentially for Hong Kong IPO in rare move, sources say
Shein aims to submit the filing confidentially as soon as this week, one of the sources said. A second source said the filing was expected to be made by Monday.
Shein's confidential filing, if approved, would represent a waiver of one of the main listing rules by the Hong Kong exchange for one of the world's most closely-watched IPO candidates, and possibly the largest in the city this year, two of the sources said.
The filing will come as the company, which sells low-priced apparel such as $5 dresses and $10 jeans in around 150 countries, makes its third attempt to go public, more than 18 months after it first filed for a U.S. IPO in late 2023.
Confidential filings enable companies to keep vital operational and financial information under wraps for longer and allow them to go through the regulatory review process without public disclosure.
Hong Kong's listing rules permit confidential filings for secondary listings by companies already listed on recognised overseas exchanges, such as the New York Stock Exchange or Nasdaq.
The exchange could also waive or modify the publication requirements in a spinoff from an overseas listed parent upon application by a new applicant, the listing rules show.
While this practice is common for IPO applicants in the U.S., it remains relatively rare in Hong Kong, where high-profile IPOs have included Chinese tech giants Xiaomi (1810.HK), opens new tab and Meituan (3690.HK), opens new tab, which both filed publicly for their floats.
The sources spoke to Reuters on the condition of anonymity as they were not authorised to speak to the media.
Shein, founded by China-born entrepreneur Sky Xu, did not reply to a request for comment. The Hong Kong stock exchange declined to comment on individual companies.
Documents, including financials, related to Shein's IPO will remain undisclosed until the company passes a hearing with the Hong Kong stock exchange, which is the final step in the city's regulatory approval process.
Prior to that final step, Shein must secure an approval from the China Securities Regulatory Commission (CSRC) to go ahead with the Hong Kong IPO. It is not known if Shein has already secured a verbal nod from the Chinese securities regulator.
The CSRC did not respond to Reuters request for comment.
Reuters first reported last month, citing sources, that Shein was working towards a listing in Hong Kong after its proposed London IPO failed to secure the green light from Chinese regulators.
The New York attempt also did not receive CSRC approval, Reuters previously reported.
Shein's confidential submission of the prospectus enables Hong Kong and mainland Chinese regulators to assess the IPO application, raise their questions to Shein and prepare it for regulatory approval privately, the sources said.
The regulators would be able to do that before public, including potential institutional investors', scrutiny of its application materials, including risk factors, they added.
The filing would come against the backdrop of Shein grappling with the knock-on impacts of the Sino-U.S. trade war after U.S. President Donald Trump ended duty-free treatment of ecommerce parcels and hiked tariffs on Chinese goods, hurting its business in the U.S., its biggest market.
Shein was valued at $66 billion during its pre-IPO fundraising round in 2023, down by a third from a funding round one year earlier. Its eventual IPO valuation will hinge on the impact of the tariff changes, sources have said.
A Shein listing would help Hong Kong, which saw $12.8 billion worth of IPOs and second listings in the first half, re-establish its credibility as a global fundraising centre at a time of major volatility stoked by U.S. trade policy changes.
Shein, founded in mainland China in 2012, is hoping to succeed in Hong Kong after failed attempts to list in New York and then London, where Britain's financial regulator approved the listing.
Shein will have to file with the CSRC within three working days after submitting its IPO application in Hong Kong, in line with Beijing's rules for Chinese firms seeking offshore listings.
Shein shifted headquarters from China to Singapore in 2022 and does not own or operate any factories, but remains subject to Chinese IPO rules because its products are mostly made by a network of 7,000 third-party suppliers in China, sources have said.
The CSRC applies the rules on a "substance over form" basis, granting it discretion on when and how to implement them.
A draft prospectus would normally disclose key risks to a company including those linked to its supply chain.
Shein has faced allegations from politicians and campaigners that its supply chain in China is linked to forced labour of Uyghur minorities in Xinjiang, a highly contentious issue for Beijing, which denies any abuses in the cotton-producing province.
The U.S. has a ban in place on imports of products made using forced labour from Xinjiang, and Shein has said it does not allow its suppliers to use Chinese cotton in U.S.-bound products.
Shein has said its supplier code of conduct prohibiting forced labour applies worldwide.
Try Our AI Features
Explore what Daily8 AI can do for you:
Comments
No comments yet...
Related Articles
Reuters
20 minutes ago
- Reuters
Yum Brands in talks to facilitate merger of its two Indian partners, ET reports
July 4 (Reuters) - Yum Brands (YUM.N), opens new tab, which owns KFC and Pizza Hut, is in talks to facilitate a merger of its Indian franchisee partners Devyani International ( opens new tab and Sapphire Foods ( opens new tab, the Economic Times reported on Friday, citing sources. Shares of Sapphire Foods rose 7.5% while Devyani was trading 2.8% higher as of 1:40 p.m. IST. The development comes at a time when most fast food franchisees across India are struggling with a slowdown in same-store sales growth and margin expansion, as consumers reeling under high cost of living cut back on dining out and ordering in. Sapphire reported a 6% sequential decline in KFC and 13% sequential decline in Pizza Hut's average daily sales for the quarter ended March, while Devyani's KFC same-store sales saw a decline of 6.1% in the fourth quarter year-on-year. However, its Pizza Hut same-store sales grew 1%. The talks could see Sapphire Foods merge into Devyani International via a share swap, with Sapphire shareholders potentially receiving one Devyani share for every three held, the newspaper reported, citing one source. The deal may involve Devyani acquiring Sapphire's KFC and Pizza Hut franchise rights, or consolidating all KFC franchisee stores in India under Devyani, the report added. Devyani's market capitalization is at 211.4 billion rupees ($2.48 billion), while Sapphire's stood at 110.8 billion rupees, according to data from National Stock Exchange of India. Devyani had more than 2,000 stores across its network in India, Thailand, Nigeria and Nepal, as of March 31. Sapphire had 836 KFC and Pizza Hut restaurants in India and 127 Pizza Hut and Taco Bell restaurants in Sri Lanka as of March end. Devyani and Sapphire did not respond to requests for comment, while U.S.-based Yum Brands was not available for comment outside regular business hours. ($1 = 85.3580 Indian rupees)
Reuters
20 minutes ago
- Reuters
China's intense EV rivalry tests Thailand's local production goals
BANGKOK, July 4 (Reuters) - Hyper-competition in China's electric vehicle sector is spilling over to its biggest market in Asia, Thailand, as smaller players struggle to compete with dominant BYD ( opens new tab, putting ambitious local production plans at risk. Neta, among the earliest Chinese EV brands to enter Thailand in 2022, is an example of a struggling automaker finding it difficult to meet the requirements of a demanding government incentive programme meant to boost Thai EV production. Under the scheme, carmakers are exempt from import duties, but were obligated to match import volumes with domestic production in 2024. Citing slowing sales and tightening credit conditions, carmakers asked the government to adjust the scheme and the 2024 production shortfall was rolled over into this year. Neta has said that it cannot produce the required number of cars locally and the government has withheld some payments to the EV maker, said Excise Department official Panupong Sriket, who received a complaint filed last month by 18 Neta dealers in Thailand seeking to recover over 200 million baht ($6.17 million) of allegedly unpaid debt. The complaint, a copy of which was reviewed by Reuters, also detailed missed payments by Neta related to promised support for building showrooms and after-sales service. "I stopped ordering more cars in September because I sensed something was wrong," said Neta dealership owner Saravut Khunpitiluck. "I'm currently suing them." Neta's parent company, Zhejiang Hozon New Energy Automobile, entered bankruptcy proceedings in China last month, according to state media. Neta and its Chinese parent did not respond to Reuters' requests for comment. Neta's share of Thailand's EV market peaked at around 12% of EV sales in 2023 when the industry was growing, according to Counterpoint Research data, with BYD having a 49% share that year. In Thailand, a regional auto production and export hub, Chinese brands dominate the EV market with a combined share of more than 70%. The number of Chinese EV brands has doubled in the last year to 18, placing pressure on those that lack the reach of BYD, which has taken over from Tesla (TSLA.O), opens new tab as the world's biggest EV maker. In the first five months of this year, new registration of Neta cars - a proxy for sales - slumped 48.5% from the prior year and its share of EV registrations was down to 4%, according to government data. "Neta's downturn in Thailand reflects the fragility of second-tier Chinese EV brands both at home and abroad," said Abhik Mukherjee, an automotive analyst at Counterpoint Research. "Intense price competition and the scale advantages of dominant players have made survival increasingly difficult for smaller companies, particularly in export markets, where margins are slim and robust after-sales support is essential." In Thailand, Neta's biggest international market, it sells three models, with the cheapest Neta V-II Lite priced at 549,000 baht ($16,924) before discounts, compared to market leader BYD's entry-level Dolphin model that is priced at 569,900 baht. Thailand's domestic auto market has become increasingly competitive amid a sluggish economy. "Some Chinese brands have slashed prices by more than 20%,' said Rujipun Assarut, assistant managing director of KResearch, a unit of Thai lender Kasikornbank. "Pricing has become the main strategy to stimulate buying." China's EV overcapacity and price war have pushed automakers to expand abroad, but markets like Thailand are now mirroring the same hyper-competitive pressures, exposing smaller firms to similar risks. Three years ago, Thailand unveiled an ambitious plan to transform its car industry, long dominated by Japanese majors like Toyota (7203.T), opens new tab and Honda (7267.T), opens new tab, to ensure at least 30% of its total auto production was EVs by 2030. The country, which exports about half of its auto output, has drawn more than $3 billion in investments from a clutch of Chinese EV makers, including Neta, who were partly lured to Southeast Asia's second-largest economy by the government incentive scheme. "Neta's case should give the Thai policymakers pause," said Ben Kiatkwankul, partner at Bangkok-based government affairs advisory firm, Maverick Consulting Group. Last December, after a sharp sales contraction, Thailand's Board of Investment gave EV makers an extension to the initial local production timeline to avoid oversupply and a worsening price war. Under the original scheme, local EV production in 2024 was required to match each vehicle imported between February 2022 to December 2023 or the automaker would incur hefty fines. Car manufacturers avoided those fines with the extension carrying over unmet production into this year, but at a higher ratio of 1.5 times imports. Thailand's Board of Investment did not respond to a Reuters request for comment. Siamnat Panassorn, vice president of the Electric Vehicle Association of Thailand, said Neta's issues were company-specific and did not reflect flaws in Thai policies or the market. But external shocks, including geopolitical tensions and the spectre of higher tariffs, have added to the pressure felt by the sector, he said. For Thai Neta dealers like Chatdanai Komrutai, the crisis is deepening. The brand's car owners have taken to social media in droves to share maintenance issues and limited after-sales support and a consumer watchdog agency is inspecting some of those complaints. "Selling cars is difficult right now," Chatdanai said. "There's no confidence." ($1 = 32.4100 baht)
Reuters
35 minutes ago
- Reuters
China spares major cognac makers from EU brandy dumping duties
SHANGHAI, July 4 (Reuters) - China spared major cognac producers Pernod Ricard ( opens new tab and Remy Cointreau ( opens new tab from new duties of up to 35% on EU brandy announced on Friday, provided they sell at a minimum price. China's Commerce Ministry issued its final ruling following an investigation into brandy originating in the European Union, most of it cognac from France, first launched last year. Duties of up to 34.9% for a period of five years starting from July 5, 2025 would be levied on those without minimum price commitments or those that breached promised minimums, the ministry said in a statement. It did not disclose the minimum prices. French cognac makers have complained they are collateral damage in a broader trade row between Brussels and Beijing over import tariffs imposed on China-made electric vehicles (EVs). Last October, China imposed temporary anti-dumping measures of up to 39% on imports of brandy from the EU, including on French brands including Hennessy and Remy Martin, after the European Union accused Beijing of giving its auto industry unfair subsidies, and imposed duties on imports of Chinese-made EVs. Monthly cognac exports to China, the world's most valuable market for the spirit, have fallen by as much as 70% due to the trade dispute, according to data from the Bureau National Interprofessionnel du Cognac (BNIC), an industry body. Last week Reuters reported that French cognac makers had reached a tentative deal on minimum import prices for the Chinese market, but that China would only finalise the deal if progress was made regarding EU tariffs on Chinese-made EVs. Pernod Ricard, Remy Cointreau, LVMH's ( opens new tab and Campari ( opens new tab did not immediately respond to requests for comment on Friday. The news will likely be welcomed by brandy distillers that have also seen sales slow in the United States, the world's biggest cognac market by volume, as a result of inflation and economic uncertainty.
