Shein to pay up to US$3.5 billion to select pre-IPO investors around Hong Kong listing

[HONG KONG] Online fast fashion retailer Shein will pay up to US$3.5 billion to selected existing investors – almost twice the fresh capital it is seeking in an initial public offering – to help compensate them for a sharp slide in its valuation, its prospectus showed on Monday (Aug 24).

The investors entitled to the payments in cash and extra shares include entities linked to Boyu Capital, Tiger Global, General Atlantic, Thrive Capital, Mubadala, Brookfield and others, the filings showed.

They hold Shein’s late-stage funding shares – Series pre-D, Series D and Series D plus preferred – which carry protections triggered by an IPO below the prices paid in earlier funding rounds.

The broader group of preferred shareholders also includes Sanabil Private Equity, Coatue, D1 Capital, DST Asia, Reliance Retail, Coppel Capital, and Claure Group.

The prospectus for its listing in Hong Kong does not disclose how much each investor will receive.

The payments are nearly double the up to HK$13.86 billion (US$1.77 billion) that Shein aims to raise by selling about 280 million shares in its IPO, based on the top end of its indicated price range.

Shein’s proposed IPO price of HK$47.60 to HK$49.50 per share would value the company at up to about US$27 billion.

That is below the private valuations attached to the eligible funding rounds of US$60.5 billion for the Series pre-D round in 2022, US$98.2 billion for the Series D round later that year and US$64 billion for the Series D plus round in 2023.

Shein said it could pay up to US$2.2 billion in cash under the conversion adjustment protections, assuming the IPO is priced at the bottom of the range.

SEE ALSO

Shein’s valuation plunges 70% to US$27 billion at best in Hong Kong IPO

Shein proposes cash payouts, more shares for late-stage investors ahead of IPO

Shein finds there’s no place like China after Vietnam warehouse experiment disappoints  

It will also issue 19.6 million additional shares to eligible holders at no cost.

Separately, Shein also agreed to make about US$1.33 billion in payments to holders of Series pre-D, D and D plus preferred shares.

That includes about US$1.1 billion, payable in three instalments by Mar 31, Jun 30 and Sep 30. A further estimated US$230.4 million, which accrues until the IPO closes, will be paid within 15 business days after IPO completion.

Shein said the payments will be funded from its own financial resources. Holders of Shein’s older Series A, Series B, Series C and Series C plus preferred shares are not covered, the prospectus showed. REUTERS