Why Shein may need an IPO despite having USD 14.8 billion in cash

Many companies go public because they need money. Shein may be the opposite.

From 2023 to 2025, Shein generated USD 1.757 billion, USD 1.405 billion, and USD 2.838 billion in net cash from operating activities, respectively. That amounts to about USD 6 billion over three years. As of March 31 this year, its cash resources stood at USD 14.831 billion.

For comparison, Shein raised about USD 3.84 billion in equity financing from Series A through Series D+, plus RMB 169 million (USD 25 million) in its Series B round, according to its prospectus.

In other words, the cash Shein generated from operations over the past three years already exceeds what it raised from investors over the preceding 11 years.

Its working capital model also reduces the need for external financing. Customers pay upfront, while inventory turnover was just 36 days in 2025.

A company with that kind of cash generation would appear to have little reason to rush to the public markets for funding.

But another number in Shein’s prospectus stands out: USD 17.294 billion.

That was the carrying amount of its convertible redeemable preferred shares as of March 31.

More importantly, those shares come with a clock. The cash return rate for pre-Series D, Series D, and Series D+ investors increased from 8% to 12% on March 5. And if Shein withdraws its IPO, has its application rejected, or allows the application to lapse without filing again within 12 months, suspended redemption rights can be restored.

That raises a different question: why does a company that generated USD 6 billion in operating cash over three years and has USD 14.8 billion in cash resources still need to go public?

To understand why Shein now finds itself at the door of the Hong Kong Stock Exchange, the clock needs to be turned back 11 years, to its first USD 5 million investment.

The starting point

Shein was incorporated in the Cayman Islands on May 12, 2014, with authorized share capital of USD 50,000.

On June 30 that year, it carried out a share subdivision and issued shares at a par value of USD 0.0001 each to companies controlled by its four founders. All were registered in the British Virgin Islands. Sky Xu’s entity received 49.6792 million shares, while entities controlled by the other three founders received 13 million shares each.

At par value, Xu’s consideration came to roughly USD 4,968.

Subscribing for founder shares at par value is standard practice and does not reflect the company’s market value at the time. But it provides a starting point for Shein’s financing history. 11 years later, the company reported USD 1.707 billion in operating profit for 2025.

Eight months after its Cayman incorporation, Shein completed its Series A round on February 17, 2015. It issued 9.4339 million ordinary shares to an investor at about USD 0.50 each, raising USD 5 million.

Those shares were later exchanged and consolidated into 5.39 million Series A preferred shares. The pre-money valuation was USD 53 million. Against a valuation of USD 64 billion today, that implies a paper increase of more than 1,200 times.

Shein launched its mobile app the same year.

Its prospectus also reveals several details about how its financing evolved.

The first is that the Series B investment took years to settle. The agreement was signed on April 28, 2016, and Shein received RMB 169 million, but the shares were issued in stages from June 28, 2018, through August 17, 2020.

The second is how quickly Shein’s customer base expanded relative to its valuation.

When the Series C round took place, active customers had only just surpassed 10 million. A USD 2.4 billion pre-money valuation implied a valuation of no more than USD 240 per active customer.

By the Series C+ round, active customers had surpassed 50 million while the pre-money valuation reached USD 5 billion, lowering the implied valuation per customer to no more than USD 100.

During that period, customer growth outpaced the increase in valuation.

Then came 2022.

Shein’s pre-money valuation jumped from USD 5 billion in the Series C+ round to USD 60.5 billion in the pre-Series D round, then to USD 98.2 billion in Series D.

Based on the 41.1% revenue growth Shein disclosed for 2023, its 2022 net revenue was roughly USD 22.75 billion.

The USD 98.2 billion Series D pre-money valuation therefore represented about 4.3 times 2022 sales.

Within roughly a year, however, the valuation had fallen sharply.

Settlement of the Series D+ round began in May 2023 at a pre-money valuation of USD 64 billion, about 35% below the Series D valuation. Against 2023 net revenue of USD 32.103 billion, that implied a price-to-sales multiple of roughly two times.

A valuation reset was hardly unusual in global private markets during 2022 and 2023. But Shein’s operating performance makes the adjustment notable. Revenue increased substantially even as the valuation benchmark fell.

Over the period, total order volume rose from 715 million to 1.078 billion, active customers increased from 186 million to 273 million, inventory turnover remained at 36 days, and Shein expanded its network of contract manufacturers from 5,800 to 7,500.

The business was still growing, but the pace was slowing.

Net revenue growth moderated from 41.1% to 8%, then to 1.1% in the first quarter of 2026. US revenue fell 3.5% in 2025 and declined another 14.3% year-on-year in the first quarter of 2026.

In that sense, the valuation adjustment that began in 2023 anticipated a slower phase of growth.

The USD 64 billion valuation attached to the Series D+ round may therefore have proved closer to the company’s later operating trajectory than the USD 98.2 billion Series D valuation.

Who invested, and at what price

Shein’s prospectus does not directly state how much each institution invested. But its capitalization table discloses how many preferred shares each shareholder held after each round, while the financing terms provide the corresponding share prices.

Taken together, the figures allow some investments to be estimated.

The Series B round raised RMB 169 million at RMB 0.36 (USD 0.05) per share. According to 36Kr, IDG invested about RMB 95 million (USD 14.1 million) and Greenwoods Asset Management about RMB 49 million (USD 7.3 million).

The Series C round raised USD 243 million at USD 0.67 per share.

The Series D round raised roughly USD 1.835 billion at USD 23.72 per share. Based on the capitalization table, Boyu Capital invested about USD 700 million at a USD 98.2 billion pre-money valuation, representing about 38% of the round.

The Series D+ round raised about USD 1.737 billion at USD 15.02 per share.

The difference between early and late investors is substantial.

IDG invested about RMB 95 million in Series B and USD 30 million in Series C, equivalent to roughly USD 44 million in total, and owns 7.88% of the company.

Greenwoods Asset Management invested about RMB 49 million in Series B and USD 21 million in Series C. It owns 4.28%.

Boyu Capital invested about USD 700 million in Series D and USD 115 million in Series D+, or roughly USD 815 million in total. It owns 0.95%.

Boyu therefore invested more than ten times as much as IDG but held less than one-eighth as much equity.

The reason is timing. IDG entered when Shein was valued at around RMB 1.1 billion (USD 162.8 million). Boyu entered when the company’s valuation had already reached USD 98.2 billion.

HSG and HCEP Management stand out for another reason. They were the only institutional investors present across Series A, Series C, Series C+, pre-Series D, Series D, and Series D+. They were also the largest contributors to the discounted Series D+ round, investing USD 395 million.

Sequoia Capital is listed separately in the shareholder register. Following HSG’s separation from Sequoia in 2023, entities associated with both now appear among Shein’s shareholders. HSG currently holds 5.8%.

One transaction in March 2022 shows how sharply valuations were moving at the time.

On March 4, when the pre-Series D round settled, several existing shareholders sold 413,900 ordinary shares to pre-Series D investors at roughly USD 724.9 per share, for total consideration of USD 300 million.

The prospectus states that these shares were later redesignated as pre-Series D preferred shares and that Shein itself received none of the proceeds.

The USD 300 million went entirely to the selling shareholders.

On the same day, settlement of the Series D round began. Shein issued new shares to Series D investors at about USD 1,186 each, raising around USD 1.8 billion.

The two transactions therefore took place in the same company on the same day but at very different implied valuations.

Based on the disclosed holdings, 36Kr estimates that HSG and HCEP acquired about USD 220 million of the pre-Series D secondary shares, while True Creative Limited acquired about USD 80 million.

The prospectus also contains an important adjustment affecting Series D investors.

On paper, the pre-Series D, Series D, and Series D+ rounds were priced at USD 14.50, USD 23.72, and USD 15.02 per share, respectively. That would suggest that Series D investors paid substantially more than investors in the following round.

But the prospectus notes that the cost and premium paid per share were calculated using the actual number of Series D preferred shares rather than on a converted basis.

Under Shein’s current memorandum and articles of association, each Series D preferred share can be converted into 1.5791 Class B shares.

On a converted basis, that ratio substantially narrows the apparent pricing gap between Series D and Series D+ investors.

The pre-Series D, Series D, and Series D+ rounds also benefit from additional protections disclosed in the prospectus.

Shein’s shareholder base expanded significantly by the Series D+ round. Investors included MIC Capital Management 81 RSC of Abu Dhabi, Sanabil Private Equity of Saudi Arabia, Reliance Retail Ventures of India, Coppel Capital of Mexico, Microsoft Capital Group, Claure Group, Brookfield, General Atlantic, Tiger Global, Coatue, D1, DST Asia IX, and Thrive Capital.

Another transaction involved shares rather than cash.

On August 12, 2023, Shein entered into a subscription and exchange agreement with Sparc Group. Sparc transferred Class A common units representing roughly one-third of its interest to Shein in exchange for 649,100 Class B shares.

After accounting for the share split, Sparc now holds 32.4553 million Class B shares, making it Shein’s largest Class B shareholder. The exchange used the same USD 64 billion valuation as the Series D+ round.

Two layers of investor protection

The prospectus discloses anti-dilution protections that apply if Shein issues equity securities, calculated on a Class B converted basis, below the applicable conversion price of a series of preferred shares.

The mechanisms differ by round.

For Series A, Series B, Series C, Series C+, pre-Series D, and Series D shares, adjustments are made on a broad-based weighted-average basis.

For Series D+, the adjustment uses a full-ratchet mechanism.

A full ratchet provides stronger anti-dilution protection. If qualifying new shares are issued below the applicable conversion price, that price can be reset to the lower issuance price regardless of the number of shares issued. According to the prospectus, this can include shares issued in the IPO.

There is another layer.

At an extraordinary general meeting on March 3 this year, shareholders approved an alternative conversion adjustment mechanism for holders of pre-Series D and Series D shares. Under it, Shein must compensate them “to achieve the final economic effect” of adjusting the applicable conversion price.

Those adjustments are expected to involve a combination of cash payments and additional Class B shares.

Shein has authorization for 200 million Series D+ preferred shares, of which about 115.6 million have been issued. The remaining authorization leaves additional headroom that could potentially accommodate future adjustments if required.

Shein also agreed to make cash payments to holders of its pre-Series D, Series D, and Series D+ preferred shares.

From their respective issuance dates through March 4, 2026, those payments accrue at a fixed annual rate of 8% of the relevant issue prices, calculated on a 365-day basis.

The total, roughly USD 1.1 billion, is scheduled to be paid in three equal installments by March 31, June 30, and September 30 this year.

From March 5, the rate increases to 12% annually and continues accruing until the listing is completed. The resulting amount must be paid within 15 business days after the IPO.

Evidence of those obligations is already visible on the balance sheet. As of March 31 and May 31, accrued expenses and other current liabilities included USD 713 million in distributions payable to certain holders of convertible redeemable preferred shares.

Taken together, the mechanisms soften the economic impact of Shein’s valuation reset on some of its later investors.

The Series D conversion ratio narrows the pricing difference between Series D and Series D+ investors. Anti-dilution provisions provide protection if shares are issued below certain conversion prices. The cash payments compensate investors for the time their capital remains tied up.

Since March 5, that waiting period has become more expensive for Shein, with the applicable cash return rate rising from 8% to 12%.

That brings the analysis back to the central question. Why does a company that generated USD 6 billion in operating cash over three years and holds USD 14.8 billion in cash resources still have strong reasons to complete an IPO?

The prospectus provides an important clue.

It states that the redemption rights attached to Shein’s preferred shares automatically terminated immediately after the company submitted its IPO application to the Hong Kong Stock Exchange under Chapter 4.2 of the guide for new listing applicants.

But those rights can be restored if Shein withdraws the IPO, the Hong Kong Stock Exchange rejects the application, or the application lapses and the company does not submit a new one within 12 months.

In practical terms, the redemption rights have not necessarily disappeared for good. Their status depends on the listing process reaching a successful conclusion.

The size of the obligation is significant.

As of March 31, the carrying amount of Shein’s convertible redeemable preferred shares stood at USD 17.294 billion.

At the end of 2025, those shares were reclassified from noncurrent to current liabilities. That pushed total current liabilities from USD 7.290 billion to USD 26.057 billion, leaving Shein with net current liabilities of USD 8.464 billion and a shareholders’ deficit of USD 6.958 billion.

Against that, Shein had USD 14.831 billion in cash resources as of March 31.

If the preferred shareholders’ redemption rights were restored and fully exercised, Shein’s existing cash resources would not by themselves cover the carrying amount of the preferred shares.

The prospectus therefore suggests that Shein’s IPO may be about more than raising fresh capital. Completing the listing would also resolve a large preferred share overhang by converting those securities into equity and removing the associated redemption risk.

Seen this way, Shein’s financing history is not simply a story about how much capital it raised.

The company reached a USD 98.2 billion valuation in 2022, only for its next major financing round to reset that figure to USD 64 billion. Over the years that followed, revenue continued to grow, but at a slowing rate.

At the same time, conversion adjustments, anti-dilution protections, and cash returns have helped protect some of the investors who entered at or near the peak valuation.

The final economics will depend in part on the IPO price. If qualifying shares are issued below the relevant conversion prices, anti-dilution mechanisms could be triggered, potentially resulting in additional Class B shares and dilution for existing shareholders.

Delaying the listing also carries a cost because the 12% cash return continues to accrue until completion.

And if the IPO process fails under the circumstances set out in the prospectus, redemption rights could be restored, bringing the USD 17.294 billion preferred-share balance back into focus.

Following its listing hearing, Shein is expected to launch its share offering on August 20.

KrASIA features translated and adapted content that was originally published by 36Kr. This article was written by Peng Xiaoqiu for 36Kr.

Note: RMB figures are converted to USD at rates of RMB 6.76 = USD 1 based on estimates as of August 19, 2026, unless otherwise stated. USD conversions are presented for ease of reference and may not fully match prevailing exchange rates.