Shein wants to win over Wall Street and Washington
With the confidential filing of an IPO, Shein, the ultrafast fashion retailer, is demonstrating ambition on two fronts.
The company and its underwriters expect investors to be more open to initial public offerings, even though high-profile market debuts have been largely absent this fall. Shein is also testing whether the company can withstand what is expected to be increasing political pressure on the China-founded e-commerce giant.
The company has severed some of its key ties with China, after drawing opposition from Washington. The changes included moving the headquarters to Singapore and deleting the company’s original headquarters in Nanjing. The company has also set up offices in Ireland and Indiana and hired a number of lobbyists in the United States
But that wasn’t enough to invalidate the test. “No one should be fooled by Shein’s efforts to cover his tracks,” Sen. Marco Rubio, Republican of Florida, wrote in a letter to fellow lawmakers.
Allegations of forced labor are a matter of great concern. Shein is dogged by allegations that the company sourced material from Xinjiang; The US has sought to ban the import of clothing from the northwestern region of China, citing human rights abuses against the Uyghur ethnic minority there.
Last year, Bloomberg reported that some Shein products were made from Xinjiang cotton. Members of Congress and state attorneys general have urged the SEC to require the company to certify through an independent process that it does not use Uyghur forced labor. (The company has said it has “zero tolerance” for this practice and has no manufacturers in Xinjiang.)
Shein also hopes investors will welcome an IPO Bankers had hoped that the long-stagnant market for new listings would reopen in the fall with offerings from chip designer Arm, grocery delivery service Instacart and sandal maker Birkenstock. Instead, these debuts quickly failed.
But dealmakers say 2024 is a better choice for IPOs because of improving economic and market conditions. (And both Arm and Birkenstock have since seen their shares rise above their listing prices.) Shein – which works with JPMorgan Chase, Goldman Sachs and Morgan Stanley – also has high hopes for the valuation, now at $66 billion. dollars should be.
The retailer isn’t the only big-name company betting on an IPO revival: Reddit is reportedly testing the waters for an offering, and luxury sneaker maker Golden Goose is also said to be taking steps toward a stock market listing.
Here’s what’s happening
Israel and Hamas extend their ceasefire. The tenuous agreement opens the door for more aid to Gaza and the possible release of more hostages and prisoners. It comes a day after Benjamin Netanyahu, Israel’s prime minister, and Elon Musk toured the site of a deadly Hamas attack on Israelis; Musk wants to allay concerns that he has stoked anti-Semitic sentiment on his social media platform X.
Barclays is reportedly considering a wide range of investment banking clients. According to the Financial Times, such an overhaul is expected to save about $1 billion in costs and raise capital and focus on less profitable customers. High interest rates and a slowdown in the global economy have affected Barclays’ core businesses such as lending and dealmaking.
EU regulators raise concerns about Amazon’s $1.7 billion takeover bid for iRobot. Shares of the robot vacuum cleaner maker plunged on Monday after antitrust regulators in Brussels warned that a takeover could hurt competition. The European Commission plans to make a decision on the deal by February.
Sports Illustrated deletes article after furor over AI-generated content. An investigation by Futurism found that several articles on the publication’s website contained author images and profiles conjured using artificial intelligence. Arena Group, which has published Sports Illustrated since 2019, said an outside vendor created the questionable content.
Europe’s tech scene is experiencing a partial recovery
The past year has been difficult for the European tech industry as around $400 billion in company valuations plummeted due to market volatility and a deteriorating economy.
Now, 12 months later, things are looking better, according to the latest annual survey from venture capital firm Atomico. But the challenges that slowed growth in 2022 are likely to persist for some time.
Some of the reviews have come back, According to Atomico: The total valuation of private and publicly traded technology companies rose to $3 trillion, erasing last year’s losses and returning to boom-time levels of 2021.
While the underlying data provides cause for caution – most of this increase was driven by the recovery in public market values - there was also reason for optimism. Private market valuations are mostly back to their five- and 10-year averages, but are still below 2021 levels.
Only seven new companies achieved “unicorn” status with a valuation of $1 billion. That’s down from 108 in 2021 and 48 last year. Meanwhile, the number of “dehorned” unicorns, those that have fallen below the $1 billion threshold, will be 50 in 2023, down slightly from 58 last year.
European start-ups need more capital. Total investment in the technology sector is expected to reach $45 billion this year, down 45 percent from 2022. (That’s still the third-highest year on record.) The number of so-called mega fundraising rounds in Europe has fallen to just under $30 billion, down to just 36 this year, down from 163 in 2022.
That’s partly because in Europe there has been an almost complete decline in the activity of so-called crossover investors like Tiger Global and Coatue, which pour large amounts of money into late-stage startups. It doesn’t help, Atomico argues, that European pension funds continue to invest only a tiny fraction of their assets in the continent’s venture capital firms.
Other notable findings from the report:
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Europe is attracting more tech workers, including from the US, than it is losing. There are now more AI professionals on the continent than in the US, although many of them still work for American tech giants like Alphabet and Meta.
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The prospects for investors to exit startups remain unclear given the still difficult IPO market. But buyers, including both corporations and private equity firms, continue to show interest in acquiring tech start-ups.
If it works, paying for access to Xi
Xi Jinping, the Chinese leader, received a warm welcome earlier this month at a banquet in San Francisco attended by American CEOs hoping for a return to improved U.S.-China business ties. Details of what went on behind the scenes are beginning to emerge.
According to the Wall Street Journal, the CEO of Broadcom, whose $69 billion takeover of VMware was blocked by Beijing regulators, paid $40,000 to sit at Xi’s table. (Mastercard and Boeing were among the dinner’s underwriters.) But the cost appears to have been worth it, The Journal reports:
A few days after the dinner, China signed the deal with Broadcom. Beijing also gave New York-based payment processor Mastercard the long-awaited green light to issue its branded yuan-denominated cards in the country.
Some observers viewed the moves as an olive branch for American companies as they become increasingly wary of doing business in China. The moves also show how companies can become pawns in the intensifying geopolitical competition between Washington and Beijing.
However, Boeing has not experienced this success: the company still has not reached an agreement to sell more planes in China.
Rajat Gupta, the musical
When Rajat Gupta, the former CEO of consulting giant McKinsey, went on trial for insider trading in 2012, his wife and four daughters sat in the front row of the gallery every day.
Now his youngest daughter, Deepali Gupta, 33, has turned some of those moments into what she calls a musical tragedy, linking the public spectacle of the scandal to her family’s internal struggles and her own troubled relationship with her father, writes Anupreeta from the Times Das for DealBook. The musical “United States v. Gupta” ends tonight at the 50-seat Jack performance space in Brooklyn.
Deepali, a performance artist, composer and playwright, plays herself. The story is told from their perspective, using songs, transcripts, news clips (including from DealBook) and remembered conversations. Actors play multiple roles: bombastic lawyers, courtroom artists and even Judge Jed Rakoff. An actor goes bald for a minute to play former Goldman Sachs CEO Lloyd Blankfein. Rajat’s family members express their boredom while sharing snacks and sweets.
The focus is less on Rajats fall into disgrace than about how it devastated his family. Rajat, once an adviser to dozens of Fortune 500 CEOs and a hero to many high-achieving Indian Americans, was convicted of conspiracy and securities fraud for leaking confidential information about Goldman to Raj Rajaratnam, a friend who was then a billionaire hedge fund manager . Rajat was eventually sentenced to prison.
When the play’s characters visit, there are touching depictions of familial intimacy—a mother grappling with her eating habits (Jalapeño Cheetos), a father and daughter playing a card game (Sweep)—even as they tiptoe around the elephant running around the room.
Deepali said the idea for the piece came about during the processwhen she was 22 years old. Writing it allowed her to reevaluate her memories, media portrayals of the trial and the ways her family had protected her from the ups and downs, she said in an interview, adding that she found it “therapeutic.” found.
Since his release in 2017, Rajat has been trying to rebuild his reputation. In 2019, he released Mind Without Fear about his side of the case. But the play ends with Deepali asking her father: “Are you a good man?”
THE SPEED READING
Offers
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Jeff Shell, the former NBCUniversal boss who left the company after an internal investigation into inappropriate behavior, is in talks to join investment firm RedBird Capital Partners. (WSJ)
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“New bidder wants to save bankrupt trucking company if Treasury joins in” (NYT)
politics
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