Shein has become a significant player in the market.
In just 12 years, this Chinese fast-fashion giant has rapidly expanded and now serves over 150 countries. Its $5 dresses and accessories have captured the attention of young shoppers seeking more value for their money.
As Shein has grown, it has come under scrutiny from American lawmakers. Initially, it planned to list its shares in the U.S., but has since turned its focus to London, where it reportedly aims to go public in the coming weeks.
While Shein has yet to officially announce a date, its IPO would be London’s most notable in years.
What do we know about the IPO?
The IPO is imminent and likely to occur in London.
Shein, headquartered in Singapore, is set to file a prospectus for its IPO, potentially valuing the company at around £50 billion ($63.7 billion), according to a Sunday report by Sky News. The filing could happen as early as this week.
Initially planning to list in the U.S., Shein faced challenges due to allegations regarding its use of cotton from China’s Xinjiang region, home to ethnic minorities including the Uyghurs. Shein maintains a zero-tolerance policy for forced labor.
Environmental concerns have also raised issues, with some countries viewing Shein’s practices as unsustainable.
In response, the online retailer shifted its focus to a London listing, but these issues may still pose challenges, according to AJ Bell’s Russ Mould.
“Shein may find the scrutiny of a public market listing uncomfortable given concerns about its governance, supply chain, and business practices,” he stated in a note on Monday.
Why does it matter?
Shein’s IPO has been a long time coming and could be one of the most significant ever in the retail sector. It is set to be one of London’s largest IPOs in recent memory, rivaling commodities company Glencore’s 2011 listing.
In 2022, Shein was valued at $100 billion, surpassing the combined value of H&M and Zara parent company Inditex. This growth has been fueled by Gen Z’s strong demand for affordable clothing and Shein’s effective use of social media to engage users worldwide, including in the U.S. and the U.K.
“Shein has succeeded in tapping into the rising popularity of online-only fashion retailers among young British women and is now a key competitor in the world of young fast fashion in the U.K.,” said Tamara Sender Ceron, associate director of fashion and retail at market intelligence firm Mintel, in a 2022 report.
What would Shein’s IPO mean for London?
If Shein lists in London, it could be a timely boost for the U.K. markets. In recent years, numerous companies have either delisted from the London Stock Exchange or chosen to list elsewhere due to concerns about being undervalued. Arm, the British chip company, is a notable example of a major IPO that ideally could have been London’s but wasn’t.
To prevent this from happening again, officials from the U.K.’s opposition Labour Party—widely expected to win the upcoming general election—recently held talks with Shein’s executive chairman Donald Tang, hoping to encourage the company to list in London, according to The Times of London.
The IPO, given its magnitude, would bring much-needed confidence to London. However, Shein would still face scrutiny, as British lawmakers have recently called for an investigation into the company.
London is eager, but Shein’s decision is not yet certain. “The question for U.K. traders is whether this [Shein filing its prospectus] will boost the spirits of the FTSE 100, which fell 0.77% last week. If it happens this week, it would bring London closer to becoming Shein’s IPO destination,” noted Kathleen Brooks, research director at XTB.
For Shein, regardless of one’s opinion on the fast fashion giant, its listing will be a significant event in the retail sector. A successful IPO could enhance its credibility with investors, regulators, and buyers, and provide further growth capital.
Whether this will be enough to overcome the negative press and let its affordable fashion take center stage remains to be seen.
