Goldman Sachs Bought $220 Million in Shein Shares After a Failed IPO — FT

Goldman Sachs purchased approximately $220 million worth of shares in Shein, an online retailer of clothing and home goods, following the company’s unsuccessful stock market debut in September, according to the Financial Times (FT), citing a filing by the investment bank with the Hong Kong Stock Exchange.

Since Shein's initial public offering in Hong Kong, its shares have fallen nearly 40%; on October 2, they rose slightly—by 0.58%.

Last month, Goldman Sachs purchased 42 million shares of Shein, or 13% of the shares offered in the IPO. The bank carried out the transaction in its capacity as an underwriter for the listing: this role allows it to buy shares on the open market to “stabilize” shares that have not attracted investor interest, the FT explains.

In a filing with the Hong Kong Stock Exchange, Goldman stated that the transaction was conducted under a mechanism known as the “greenshoe” option — an over-allotment option that allows IPO organizers to sell investors additional shares beyond the initial plan; if the stock price falls after the offering, the underwriters buy back these shares on the market to support the price). Goldman Sachs thus purchased Shein shares at prices ranging from 35.9 Hong Kong dollars to the offering price of 48.56 Hong Kong dollars. Buying on the open market helps support the share price to some extent by increasing demand, the FT explains. At an average purchase price of 42.23 Hong Kong dollars, these transactions could have yielded a profit of about $34 million, which, according to the standard underwriters’ agreement, is divided among all the banks organizing the IPO, the newspaper reports.

Goldman Sachs declined to comment to the FT.

Analysts called Shein’s IPO, with a company valuation of $26 billion, a “disaster” after the stock plummeted 10% on its first day of trading due to weak investor demand, the FT reports. To date, the company’s market capitalization has fallen to $16.3 billion. Pepperstone Group attributed this setback, among other things, to the fact that investors now see structural growth in other areas, namely AI, robotics, and memory chips.

The stock price continued to plummet following the release of Shein’s first financial report as a publicly traded company. On Tuesday, September 29, the retailer’s stock fell 14%, hitting a new low since its market debut on September 1.

Investors were alarmed by the sharp drop in Shein’s quarterly net income. Its adjusted net income in the second quarter fell 67% year-over-year to $228 million, while its net profit margin dropped from 6.2% a year ago to 2.1%. One of the main reasons for the losses was the conflict in the Middle East, which triggered a spike in jet fuel and freight costs—a critical blow to a company that ships goods worldwide primarily by air.

This article was AI-translated and verified by a human editor