Why do companies go public?
For money. Obviously.
That is particularly easy to see in artificial intelligence. Developing large models and securing the compute to train and run them is expensive, making repeated fundraising almost a feature of the business. In China, companies such as Z.ai and MiniMax have already turned to public markets as their capital needs grow.
Then there is Shein.
The online fashion retailer launched its Hong Kong public offering on August 24, seeking to raise up to USD 1.8 billion ahead of a planned September 1 listing.
But Shein does not appear short of cash.
As of March 31, it had USD 14.831 billion in cash resources. From 2023 to 2025, it generated about USD 6 billion in net cash from operating activities. Customers also pay upfront, while inventory turned over in just 36 days in 2025.
Another USD 1.8 billion would be useful, but hardly essential. So what is the IPO for?
Growth is part of the answer. Shein has been expanding beyond fashion, while technology, branding, and international expansion all require investment.
But another answer sits on the other side of its balance sheet.
As of March 31, Shein’s convertible redeemable preferred shares were valued at USD 17.294 billion—more than its cash holdings. Those shares can convert into ordinary equity or, under certain conditions, be redeemed by investors.
They reflect more than a decade of private fundraising dating back to 2015. Shein’s pre-money valuation reached USD 98.2 billion in its 2022 Series D round before falling to USD 64 billion in the subsequent Series D+ round.
To cushion investors against that decline, holders of preferred shares issued before and during the Series D and D+ rounds receive annual cash returns. The rate rose from 8% to 12% on March 5 and will continue to accrue until Shein completes its listing.
There is also redemption risk. The redemption rights attached to Shein’s preferred shares were suspended after it submitted its IPO application, but can be restored under certain circumstances if the listing fails.
If that happened and preferred shareholders fully exercised those rights, Shein’s cash resources would not cover the USD 17.294 billion carrying amount of the preferred shares.
Completing the IPO changes that equation. The preferred shares would convert into equity, removing the redemption risk and resolving a substantial overhang accumulated during Shein’s years as a private company.
For a capital-hungry AI company, going public can mean raising money to finance what comes next. For Shein, the listing is also meant to resolve what came before.
The point is, public markets can serve a broader purpose. An IPO can raise capital, but it can also provide liquidity to shareholders, establish a traded valuation, simplify ownership structures, and give investors an exit from arrangements that become more complicated the longer a company remains private.
Shein shows why asking whether a company needs the money can, at times, miss the point.
Sometimes an IPO is about financing the future. Sometimes it is also about settling the past.
Related readings
- Behind Shein’s USD 1.8 billion offering is a business built to move quickly while tying up relatively little cash. Its IPO prospectus offers a closer look at the operating efficiency underpinning that model.
- The longer Shein waits to list, the more expensive some of its earlier financing becomes. A look at the terms attached to its preferred shares reveals why a cash-rich company can still face pressure to go public.
- Shein wants investors to look beneath the clothes. Its IPO case also rests on the technology connecting consumer demand, suppliers, production, and inventory across its sprawling fashion business.