Shein cuts valuation to £40 billion for London listing

SHEIN is preparing to lower its valuation to around £40 billion for a potential initial public offering (IPO) in London, according to three Reuters sources familiar with the matter.

This is nearly 25 per cent lower than the company's 2023 fundraising valuation as it faces increasing challenges.

The online fast-fashion retailer has been impacted by the recent decision by the Trump administration to end the "de minimis" duty exemption in the United States. The rule had allowed Shein to keep prices low by avoiding import duties.

Analysts and industry experts say the removal of the measure could affect Shein's profitability and increase product prices in the US, its largest market.

One of the sources said the final IPO valuation will depend on the effect of the de minimis change on Shein’s business. Since the removal took effect only this week, it will take time to assess the impact, the person added.

Shein and its competitor Temu accounted for more than 30 per cent of all packages shipped daily to the US under the de minimis provision, according to a 2023 report by the US congressional committee on China. The rule had exempted shipments valued at less than £645 from import duties.

The Reuters sources declined to be named as they were not authorised to speak to the media.

The de minimis removal is part of Donald Trump's decision to impose an additional 10 per cent tariff on China, which he described as an "opening salvo" in a trade dispute between the world's two largest economies. Nearly half of all packages under de minimis came from China, the congressional committee report said.

Shein had aimed to go public in London in the first half of this year, subject to regulatory approvals in the UK and China, Reuters reported last month.

The company was valued at £53 bn in its last fundraising round in 2023, down about one-third from its peak a year earlier, sources have told Reuters. If Shein goes ahead with the lower IPO valuation, it would mark the second consecutive down round for the company. The reasons were not immediately known.

The UK government has been encouraging regulators to adopt a pro-growth approach and has introduced changes to listing rules to attract companies to the London market. A UK government source, who was not authorised to discuss the matter publicly, said it remained interested in Shein launching an IPO in London.

Shein confidentially submitted documents to Britain's Financial Conduct Authority (FCA) in early June, sources told Reuters last year. However, the regulator has not yet approved the listing, and the process has taken longer than usual.

A separate source said the FCA has not made any decision on the IPO approval. Market experts note that such approvals typically take several months. An FCA spokesperson previously stated that timelines depend on the specifics of each case.

Shein switched its IPO plans to London last year after abandoning an attempt to list in the US, where it faced opposition from lawmakers over alleged labour practices and lawsuits from competitors.

The IPO will also require approval from Chinese regulators, particularly the China Securities Regulatory Commission (CSRC), sources have told Reuters.

(Reuters)