CHINA-FOUNDED fast-fashion retailer Shein plans to file a draft prospectus confidentially for its Hong Kong listing, marking a rare departure from the usual practice of companies making public filings of IPO documents, three sources with knowledge of the matter said.
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 US$5 dresses and US$10 jeans in around 150 countries, makes its third attempt to go public, more than 18 months after it first filed for a US 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.
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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 US, it remains relatively rare in Hong Kong, where high-profile IPOs have included Chinese tech giants Xiaomi and Meituan, 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.
Regulatory approval
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-US trade war after US President Donald Trump ended duty-free treatment of ecommerce parcels and hiked tariffs on Chinese goods, hurting its business in the US, its biggest market.
Shein was valued at US$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.
Risk disclosures
A Shein listing would help Hong Kong, which saw US$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 US 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 US 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 US-bound products.
Shein has said its supplier code of conduct prohibiting forced labour applies worldwide. REUTERS
