Aug 3 (Reuters) - Shein is considering lowering the cost of investment for some late-stage investors as the fast-fashion retailer pursues an IPO at a lower valuation, according to filings with the Hong Kong Stock Exchange.
The company may offer payouts to early investors as well as more shares with lower conversion price for their holdings, the public filings showed.
The plans laid out in the public disclosure confirmed Reuters' report in July, in which a source with direct knowledge of the matter
said the company will compensate investors for the decline in valuation, including cash payment.
Shein's valuation has fallen from $98.2 billion in a 2022 fundraising round to $64 billion in a 2023 round. The source told Reuters the firm is seeking up to $50 billion in valuation in the upcoming IPO.
The firm has agreed to give investors in its Pre-D, D and D+ funding rounds a guaranteed cash payout equal to an 8% annual return, or around $1.1 billion in total, on their original investment, according to the filings.
Calculated from the day they first bought in up until March 4, 2026, this payment will be made in three equal cash payments due by the end of March, June, and September 2026.
Meanwhile, if the company goes public at a price lower than what the investors paid, those investors are protected from losing money.
Investors with preferred shares will automatically convert into regular Class B shares upon listing, and their conversion price gets adjusted downwards so they get more shares to compensate.
Shein did not immediately respond to a Reuters request for comment on the cash and share offer plans.
Investors are expected to scrutinise whether Shein can justify the $40 billion to $50 billion valuation it is seeking in a Hong Kong initial public offering after the filings with the exchange showed slowing growth, a sharp decline in profitability, and rising regulatory and legal uncertainties.
(Reporting by Anjali Singh in Bengaluru and Selena Li in Hong Kong and Yantoultra Ngui in Sigapore; Editing by Nivedita Bhattacharjee and Louise Heavens)
