Shein’s $90 Billion IPO filed confidentially in London? Here’s Why?

Fashnopsis:

• Shein’s shot at a US IPO fizzled due to forced labor concerns in its supply chain.
• Now, Shein sets its sights on London for a potential $90 billion IPO.
• A successful IPO could boost Shein’s growth and reputation, but scrutiny will rise.
• Shein must address labor practice concerns to win approval and investors.
• London’s embrace of Shein’s IPO could be challenged by calls for stricter checks.

Fast-fashion Shein’s $90 Billion IPO is making strides in news just after facing roadblocks in its US IPO. The fashion giant is reportedly planning a massive IPO in London, potentially becoming a top-10 company on the prestigious FTSE 100 index. The company is aiming for a valuation of up to $90 billion, a huge sum that could shake up the London market. However, Shein’s path to going public isn’t without hurdles.

Shein filed for IPO in the US in November 2023, but Shein’s management decided that an IPO in the US was unlikely to be approved by the Securities and Exchange Commission due to the allegations that it faced regarding use of forced labor in its supply chain.

Concerns About Labor Practices and Lack of Scrutiny

News of the potential IPO comes just weeks after concerns were raised about Shein’s business practices. Three UK parliamentary committee chairs called for more time to investigate Shein’s supply chain, particularly regarding allegations of forced labor. This request came after the UK parliament dissolved ahead of a general election, raising concerns that Shein’s IPO could be approved without proper scrutiny.

Potential Benefits of an IPO

Despite the challenges, experts believe an IPO could have significant benefits for Shein. Dr. Sheng Lu, a professor of apparel studies, suggests that a successful IPO could boost Shein’s global expansion efforts. He also points out that going public could improve Shein’s reputation and credibility with consumers, investors, and policymakers. Additionally, an IPO could provide an exit for Shein’s venture capital investors, who are likely eager to see a return on their investment.

Increased Scrutiny as a Public Company

However, Dr. Lu also warns that becoming a publicly traded company comes with increased scrutiny. Shein’s business practices will likely face even closer examination by investors, regulators, and the public eye. This increased scrutiny is evident in the concerns raised by US Senator Marco Rubio, who previously wrote to the UK government expressing concerns about Shein’s alleged unethical practices and potential exploitation of labor.

What This Means for Shein and Investors

Shein’s potential London IPO is a significant development for the fast-fashion industry. The company’s massive valuation could reshape the London Stock Exchange. However, the path to going public won’t be easy. Shein will need to address concerns about its business practices and ensure its operations are conducted ethically. Investors considering investing in a potential Shein IPO should carefully evaluate the company’s response to these concerns and the potential risks involved.

Image Source: Shein