Shein, the Chinese-founded online fashion retailer, is poised to file a prospectus with Britain's Financial Conduct Authority (FCA) for a potential London Stock Exchange floatation, which could value the company at approximately £50 billion ($63.70 billion). The confidential filing is expected to take place imminently, according to sources cited by Sky News. This move comes after Shein faced regulatory hurdles and political pushback in its initial attempt to list in New York.
The company, valued at $66 billion in a fundraising round last year, has engaged with London-based financial and legal advisors to explore the listing. However, senior British lawmakers have raised concerns about Shein's suitability for a London listing, calling for greater scrutiny of its business practices. In response, Shein has stated it is strengthening its governance and compliance measures.
Shein's rapid growth and controversial business practices have made it a significant player in the global fashion industry. The company's strategy of offering a vast range of cheap clothing, heavily promoted by social media influencers, has turned it into one of the world's largest fashion retailers. However, it has faced severe criticism over its environmental practices and allegations of forced labor in its supply chain.
To bolster its green credentials, Shein recently launched a resale platform for shoppers in France, with plans to expand to the UK and Germany. This initiative follows the company's efforts to enhance its sustainability practices amid mounting scrutiny.
If Shein proceeds with its London listing, it would be a significant boost for the City of London, which has been striving to attract major companies amid competition from other global financial centers. The UK government has been working to make the country more attractive for companies to list, following a series of high-profile departures to the US.
The potential listing is not without controversy. Last year, US lawmakers called for an investigation into Shein over allegations that its supply chain included cotton sourced from Xinjiang, China, where forced labor practices have been reported. Shein has denied these allegations, asserting its commitment to zero tolerance for forced labor.
In May, a report by the Swiss advocacy group Public Eye found that workers for some of Shein's suppliers were still working 75-hour weeks, despite the company's promises to improve working conditions. Shein has stated that it is "working hard" to address these issues and has made "significant progress" in enhancing labor conditions.
Shein's executive chairman, Donald Tang, an American citizen and former banker for Bear Stearns in Asia, has been actively engaged with British officials, including Chancellor Jeremy Hunt and Shadow Business Secretary Jonathan Reynolds, to discuss the possibility of the London listing. This underscores the importance that British officials attach to attracting Shein to the UK market.
If the London listing goes ahead, Shein is expected to seek to raise over £1 billion from the sale of new shares. This would be relatively modest compared to its anticipated valuation of £50 billion or more. The company was valued at $66 billion in its last funding round early last year.
Shein's potential London IPO could become one of the most significant and contentious deals in the UK capital markets in recent years. The company, founded in China in 2012 and now headquartered in Singapore, has grown rapidly, operating in more than 150 countries with 150 million users globally. In 2022, Shein was valued at over $100 billion, surpassing the combined worth of H&M and Zara's parent company, Inditex.
The move to London comes during a challenging period for the City as a listing venue for large multinationals. Notably, ARM Holdings, the UK-based chip designer, opted to float in New York rather than London. However, the potential Shein listing, along with other prospective IPOs like Raspberry Pi, could deliver a much-needed boost to the City.
Goldman Sachs, JP Morgan, and Morgan Stanley are advising Shein on the deal. The final decision on the listing will depend on meetings with fund managers and the approval of UK listing authorities. Despite the controversies, the filing with the FCA is a significant step, making a City float for Shein highly likely.
