Will Shein be Third Time Lucky in IPO?

Shein gets ready for its Hong Kong IPO, third time a charm?

E-commerce fast-fashion retailer Shein is filing its IPO in Hong Kong, and now for the first time is shedding light on who exactly is behind it.

Chair and CEO Sky Xu Yangtian is an elusive billionaire, but if he wants Shein to have a successful IPO, he'll have to reveal more about himself.

Even his biography is sketchy: There's one story that he was born in 1984 from a poor family in Shandong, but managed to graduate with a Bachelor's of Science at Qingdao University of Technology; another suggests he studied at George Washington University in the American capital and has American citizenship. 

The company's CEO is an elusive billionaire

From a corporate communications point of view, one would expect Xu to clarify this with some kind of official biography; just leaving rumours to fester is not helpful, particularly for the IPO application.

The company moved its headquarters from Nanjing to Guangzhou in 2015, then in 2022 to Singapore, where Xu apparently has permanent residency.

This is Shein's third attempt at an IPO, after New York in 2023, and London in 2025 were no-gos, according to a Reuters podcast entitled "Shein's fraying profit sets up drab IPO". Ouch. 

The company is known for being cheap and fast fashion; it works with suppliers by ordering in batches. If something sells well then Shein orders more, if not, it drops the product so it doesn't get stuck with too much product. 

Another interesting aspect of Shein is that its customers are outside of China -- mostly the United States and Europe. 

But because the clothing is so cheap, the US and Europe are now implementing import duties on these packages, which is making Shein less appealing than before and drastically shrinking its profit margin.

Shein is criticised for its labour practices

Then there are the numerous allegations of its clothes manufactured by people working in slave-like conditions, using Xinjiang cotton, and infringing on intellectual property among others.

As a result, Reuters points out Shein's prospectus is not particularly enticing to prospective shareholders, in particular that Xu is both chair and CEO, which is not good in terms of governance, and that existing shareholders that include him will have more controlling power than new shareholders. 

Also not ideal is that Shein has revealed in its prospectus that it is being investigated by the Federal Trade Commission, though both parties did not reveal what was being investigated.

Shein's current valuation is around US$40-$50 billion, a significant drop from the US$98.2 billion value in 2022. 

Guesses are that Shein's IPO may not be as appealing as its clothing...

HK Market Sees Spectacular Trading Flop Debut

Chabaidao had biggest debut flop in Hong Kong since 2015

Hong Kong Exchanges and Clearing, which operates Asia's third-largest stock market, had a 13 percent drop in profit for the first quarter with fewer new listings and lower turnover. 

From January to March this year, net profit was HK$2.97 billion (US$380 million). 

Hopefully the second quarter gets better?

Bloomberg followed Chabaidao's first trading day

The city's largest IPO in 2024 was a Chinese bubble tea chain, Sichuan Baicha Baidao or Chabaidao (2555), which raised HK$2.59 billion (US$330 million), or HK$17.50 per share back in November.

How did it do on its first day of trading yesterday?

Soon after the markets opened, it plunged 38 percent to HK$10.80 before finishing the day slightly higher at HK$12.80.

It was considered the worst debut since 2015 for a company that had raised at least US$300 million, according to Bloomberg.

Yikes. 

Another company, Tianjin Construction Development Group also made its debut in the market and it also tanked, dropping more than 30 percent in value after having raised US$20 million in its IPO.

Not exactly what the Hong Kong government had in mind when it had hoped the stock market would help reboot the city's trading market, which has seen a drop in new listings for four consecutive years.

Lee optimistic the market will be bullish 

However, Chief Executive John Lee Ka-chiu remains optimistic that new measures by China's securities regulator will help boost sentiment.

"Dozens of companies have applied to the mainland regulators for going public in Hong Kong, including large companies from traditional industries like manufacturing and logistics, as well as key companies from high value-added industries like AI and fintech," he said.

"We have also been actively promoting financing in Hong Kong to top unicorn companies in the mainland," Lee said, referring to startups worth at least US$1 billion.

Last year the Hong Kong exchange only saw 73 IPOs, raising HK$46.3 billion...