What will Shein’s IPO mean for the retailer and for London?

Shein is something important.

In 12 years, the Chinese fast fashion giant has exploded in size and now reaches more than 150 countries. Its $5 dresses and accessories have caught the attention of younger shoppers looking to get more for less.

As it has grown, Shein has been in the crosshairs of US lawmakers. She initially planned to list his shares in the United States, but has since shifted her sights to London, where she reportedly plans to list in the coming weeks.

Although Shein has not officially announced a date, its eventual IPO would be London’s most high-profile in years.

What do we know about the IPO?

It’s coming very soon and will probably happen in London.

Singapore-based Shein is preparing to file a prospectus for its IPO that could value it at around £50 billion ($63.7 billion). News from heaven reported on Sunday. It could go public as soon as this week.

Shein was preparing to list in the United States but ran into trouble over the company’s alleged use of cotton from China’s Xinjiang region, home to ethnic minorities including Uyghurs. The company has argued that it has a zero-tolerance policy on forced labor.

Its environmental practices have also been a cause of concern for countries that consider them unsustainable.

The online retailer tried to move quickly by courting a London listing, but these issues may continue to make life uncomfortable, suggests AJ Bell’s Russ Mold.

“Shein may find the prospect of a public market listing uncomfortable given concerns about its governance, supply chain and business practices,” it said in a note on Monday.

Shoppers lining up at a Shein pop-up inside Forever 21 in Ontario, California.

Allen J. Schaben—Los Angeles Times/Getty Images

Why does that matter?

Shein’s IPO has been a long time coming and could be one of the most important ever in the retail sector. It would undoubtedly be among the largest London IPOs in recent times, after that of the raw materials company Glencore in 2011.

In 2022, the company was valued at $100 billion, surpassing the combined size of Inditex, parent of H&M and Zara.

This has been driven by Gen Z’s strong appetite for low-cost clothing and Shein’s clever use of social media to engage users, whether in the US, UK or elsewhere.

“Shein has managed to capitalize on the growing 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 UK,” said Tamara Sender Ceron, associate director of fashion and Retail sale. she said market intelligence firm Mintel in a 2022 report.

What would Shein’s IPO mean for London?

If Shein lists in London, it couldn’t come at a better time for UK markets. In recent years, a number of companies have delisted from the London Stock Exchange or chosen to list elsewhere, largely out of fear of being undervalued. Arm, the British chip company, is a particularly striking example of a major IPO that ideally could have been in London, but wasn’t.

Eager to prevent this from happening again, officials from the UK’s opposition Labor Party (which is expected to win the country’s general election next month) recently held talks with Shein CEO Donald Tang, hoping to push the company to list there. The London Times reported.

Given its size, the company’s IPO would bring a much-needed vote of confidence to London, but that doesn’t mean Shein would no longer come under scrutiny, with British lawmakers recently also calling for the company to be investigated.

Of course, London is calling, but Shein is not guaranteed to answer. “The question for UK traders is whether this (Shein’s filing of its prospectus) will lift spirits for the FTSE 100, after the index fell 0.77% last week. If this happens this week, London would be one step closer to being the destination for Shein’s IPO,” Kathleen Brooks, director of research at XTB, said in a note.

As for Shein, whether you are a fan of the fast fashion brand or not, there is no doubt that its listing will be a major event in retail. If its IPO goes smoothly, it could help the company gain more credibility among investors, regulators and buyers, not to mention more growth capital.

It remains to be seen if that will be enough to fend off the bad press and let its low-cost fashion speak for itself.

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