The company’s proposed plans include possible cash payouts for early investors and adjustments to the conversion price of their shares, allowing some shareholders to receive more shares if Shein lists at a lower valuation than expected.
The disclosures appear to confirm an earlier Reuters report that Shein was exploring ways to compensate investors following a decline in its valuation. A source familiar with the matter had previously said the company was considering financial arrangements, including cash payments, to address the reduction in value.
Shein’s valuation has dropped significantly from $98.2 billion during its 2022 fundraising round to $64 billion in a 2023 funding round. The company is reportedly seeking a valuation of between $40 billion and $50 billion for its planned IPO.
According to the filings, investors who participated in Shein’s Pre-D, D and D+ funding rounds will receive a guaranteed cash payout equivalent to an 8% annual return on their original investments, amounting to approximately $1.1 billion in total.
The payment, calculated from the date investors initially purchased their stakes until March 4, 2026, will be made through three equal instalments scheduled for payment by the end of March, June and September 2026.
Beyond the cash arrangement, Shein is also seeking to protect investors from losses if its public listing price falls below the amount they originally paid. Under the proposed structure, preferred shareholders will automatically convert their holdings into regular Class B shares once the company goes public, with the conversion price adjusted downward to provide additional shares as compensation.
Shein did not immediately respond to requests for comment regarding the proposed cash and share adjustment plans.
The company’s planned Hong Kong listing is expected to face close scrutiny from investors, particularly over whether it can justify its targeted valuation amid concerns over slowing growth, declining profitability and increasing regulatory and legal challenges.
The IPO will mark a major test for Shein as it attempts to transition from one of the world’s fastest-growing online fashion retailers into a publicly traded company while addressing investor concerns over its future growth prospects.