Shein, the fast-fashion behemoth, has taken a significant step toward its long-anticipated public offering by confidentially filing for an IPO with Britain's Financial Conduct Authority (FCA) in early June. This move follows the company's decision to explore the London Stock Exchange as an alternative to its original plan of listing in New York, which encountered substantial opposition from U.S. lawmakers.
The China-founded company, valued at $66 billion during its last fundraising round, initiated this shift in strategy earlier this year. Sources familiar with the matter, who requested anonymity, confirmed the filing but noted that Shein has yet to receive the green light from both the FCA and China Securities Regulatory Commission (CSRC). The FCA typically takes a couple of months to vet and decide on such clearances.
Should both regulatory bodies approve the IPO, Shein would publicly file its intention to float on the London Stock Exchange, initiating a four-week process of book building and price guidance before trading begins. This potential London listing marks a notable departure from Shein's long-running U.S. IPO plans, which faced numerous obstacles, including supply chain issues and political tensions between the U.S. and China.
The Labour Party, expected to win the upcoming July 4 election in the UK, has indicated its support for Shein's potential London listing. This backing could provide a significant boost to the UK market, which has seen several high-profile companies choose other venues for their IPOs. However, some senior lawmakers have called for greater scrutiny of Shein's labor practices, supply chain management, and use of import tax exemptions.
Shein's decision to pivot to London was influenced by the increasing difficulties of going public in the U.S. due to bipartisan public scrutiny over national security concerns and alleged links to forced labor. These issues have prompted federal and state officials to urge the Securities and Exchange Commission (SEC) to scrutinize or even block Shein's U.S. offering.
In addition to regulatory challenges, the fast-fashion giant faces a volatile market environment in Europe. For instance, Italian luxury sneaker maker Golden Goose recently postponed its IPO on the Milan bourse due to political uncertainty, highlighting the broader challenges for new listings in the region.
Despite these hurdles, Shein has continued to thrive in the online fashion arena. Launched in China in 2012, Shein has become a dominant player by offering trendy clothing at remarkably affordable prices, leveraging vigorous marketing strategies. By 2022, Shein had declared itself the "most searched fashion brand in the world," a testament to its widespread popularity.
The company's initial plan to list in New York was stymied by the CSRC, which advised against a U.S. IPO earlier this year. The regulator cited the company's supply chain issues as a significant concern. This led Shein to approach the FCA for a London listing, a move seen as a strategic shift to navigate the complex regulatory landscapes in both the U.S. and China.
As Shein awaits approval from the FCA and CSRC, its potential London listing could provide a much-needed boost to the UK's financial market. The Labour Party's support further underscores the political backing Shein has garnered in the UK, contrasting with the regulatory headwinds it faces in the U.S.
