REFILE-UPDATE 2-China Shein Rebels US IPO Plan Again Due to Uncertain Market Sources
REFILE-UPDATE 2-China Shein Rebels US IPO Plan Again Due to Uncertain Market Sources

REFILE-UPDATE 2-China Shein Rebels US IPO Plan Again Due to Uncertain Market Sources

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By Scott Murdoch and Chen Lin

SYDNEY, February 25 (Reuters) – Chinese fashion retailer Shein’s plan to list in the US has been put on hold due to volatile capital markets in the midst of Russia’s attack on Ukraine, said two people with direct knowledge of the case.

Reuters reported last month that Shein had revived plans to go public in New York this year, and its founder was considering a change of citizenship to circumvent proposed stricter rules for offshore IPOs in China.

The stock market’s debut plan has now been put on hold for the second time as a result of the violent market volatility over the past month, which has worsened in recent days of the invasion of Ukraine, these individuals said.

Investors regained their risk appetite overnight after some initial heavy losses earlier on Thursday as they weighed the long-term impact of harsh Western sanctions on Russia after it triggered troops, tanks and missiles against Ukraine.

But some analysts worry that all rallies could be volatile.

Shein is currently in a strong financial position, one of the sources said, and the company did not want to risk its reputation by pushing ahead with a deal in uncertain markets.

The company has not considered whether it will revive its listing plans again later this year, the source added.

Shein has no plans for an IPO, a spokesman for the company said without giving further details.

The sources refused to be identified as they were not authorized to speak to the media.

The impact of the Ukraine crisis on dealmaking has so far been dampened as companies and their advisers try to assess how long it could last and what its outcome will be, investment bankers said.

Mergers and acquisitions in advanced stages of negotiations are likely to put pressure, bankers said. If market volatility were to continue, companies could start abandoning agreements at an earlier planning stage, they added. Prolonged volatility would also put stock market debuts on hold, according to bankers.

The exposure to Russia and Ukraine will now be scrutinized by dealmakers. For example, technology companies with programmers or other employees based in Ukraine or neighboring countries may struggle to get listed or be acquired, bankers said.

LONG CONSIDERED IPO

Shein, which has grown into one of the world’s largest online fashion markets since launching in Nanjing in 2008, was valued at around $ 50 billion in early 2021. It produces clothing in China to sell online in the United States, its largest market, Europe and Asia, but does not sell in China.

It first began preparing for a U.S. IPO about two years ago, but shelved the plan in part due to unpredictable markets amid rising tensions between the U.S. and China, sources have said.

It was not clear how much the company sought to raise from its debut in New York.

The planned IPO would have been the first major U.S. stock trade with a Chinese company since regulators in the world’s second-largest economy moved to tighten supervision of such IPOs in July.

Shein founder Chris Xu looked at Singapore citizenship as part of the IPO process, in part to circumvent China’s new and stricter rules for overseas IPOs, Reuters reported last month.

The company, which has driven its rapid rise by targeting the social media-savvy “Gen Z” generation, has also aggressively expanded its Singapore office, Reuters reported last week. (Reporting by Scott Murdoch in Sydney and Chen Lin in Singapore Further reporting by David French, Chibuike Oguh and Greg Roumeliotis Editing by Sumeet Chatterjee, Kim Coghill, Muralikumar Anantharaman and Tomasz Janowski)

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