Shein, the ultra-fast fashion giant, is preparing for one of the largest initial public offerings London has seen in years. With a valuation of $66 billion at its last funding round, Shein is positioning itself for a market debut that could revitalize London’s stock exchange, which has seen several high-profile defections.
However, the public listing is paved with both opportunity and controversy as the company grapples with supply chain abuses and regulation impacts on investor sentiment.
Shein’s potential IPO has been met with optimism from some market watchers. “Shein’s listing could provide a much-needed boost to London’s stock exchange, which has recently struggled to attract high-profile IPOs,” said economist Bryce Quillin, co-founder of luxury strategy agency It’s A Working Title LLC. According to Quillin, it could send a positive signal to other companies considering London for their own public debuts, especially in the wake of a local dip in tech and retail IPOs.
But concerns about Shein’s business practices and lawsuits have cast a shadow over the IPO. Shein declined to comment for this story. Labour Party leader Keir Starmer was pressed on the matter during an interview earlier this month with Bloomberg’s head of economics and government, Stephanie Flanders. Without addressing Shein directly, Starmer said, “Let me be very clear about it: standards and high standards do matter to us.” He added, “Of course, we’ll be looking at any issue, with a particular feature on the rights of the workforce.”
Shein was effectively barred from listing in the U.S. in June due to allegations of labor law violations and its connections to Uyghur cotton. London became an attractive alternative, and Shein filed confidential paperwork in June with the financial regulatory body Financial Conduct Authority to explore a possible listing.
Oliver Scutt, senior associate at Bates Wells specializing in corporate moves, explained the regulatory challenges Shein now faces in London. “The FCA is under increasing pressure to block the listing because of ongoing labor law concerns,” Scutt said. “There’s also the Modern Slavery Act in the U.K., but it doesn’t have enough teeth to prevent this kind of listing without significant public pressure.” The Modern Slavery Act is a U.K. law designed to combat human trafficking and forced labor by requiring businesses to report on efforts to prevent modern slavery within their operations and supply chains.
Quillin noted that Shein’s labor practices in China, where reports from May suggest workers are forced to work 75-hour weeks, remain a sticking point. “This could present a serious risk for institutional investors,” he said. “London’s listing standards may be more lenient compared to the U.S., but ESG issues are increasingly important to European investors. These labor violations could negatively impact Shein’s ability to attract key institutional backers.”
Industry sentiment
The fashion industry has not held back in its criticism of Shein. The British Fashion Council has been vocal about its opposition to the IPO. Meanwhile, Stuart Trevor, founder of the fashion brand AllSaints, was among the first to speak out against the planned IPO earlier this year, referring to Shein as “fraudsters making as much noise as possible.” In a social media post, Trevor accused the company of “desperately trying to make out as if they have some sort of respectable business practice in the hope that the British Government are stupid enough to allow their stock market listing to go through.” He added, “A listing is absolutely ridiculous and cannot be allowed.”
Shein has also faced criticism over its tax practices. In an interview with the U.K. publication The Guardian this month, Julian Dunkerton, CEO of the fashion brand Superdry, accused the fast fashion giant of being a “complete environmental disaster” and claimed it was “dodging tax” by shipping low-value parcels directly to customers without import duties.
Despite this, Sir Ian Cheshire, former boss of home goods B&Q and chairman of Barclays, defended Shein’s choice of London for its IPO. On the TV show “BBC Today,” he argued that a U.K listing would hold Shein accountable to stricter environmental quality controls, which may not be the case if it listed on another exchange.
Brand image clean-up
In a bid to boost its public image, Shein has made several moves this year, such as hiring former E.U. budget commissioner Günther Oettinger as a consultant to navigate Europe’s complex regulatory environment in August.
And, in July, Shein launched a €250 million ($262 million) Circularity Fund in Europe aimed at supporting startups and businesses developing sustainable, circular fashion solutions. “As a global leader in our sector, Shein has both a responsibility and an opportunity to accelerate innovations that can address the environmental footprint of the fashion industry,” said Donald Tang, Shein’s executive chairman in a statement when the fund was announced. However, many see these efforts as superficial, with insiders viewing the Circularity Fund as more of a “pilot project” to appease regulators before the IPO rather than a genuine commitment to long-term sustainability.
Despite its controversies, Shein has experienced great financial success. News agency PA reported that Shein U.K. generated over $1.89 billion in revenue last year, up from $1.37 billion in 2022. In addition, annual profits doubled to $22.8 million, from $12 million in 2022. International figures have not been released. But the question remains if Shein can sustain this momentum in the face of growing regulations and public scrutiny.
“There’s a lot riding on Shein’s ability to convince investors that it’s making genuine efforts to address labor and environmental concerns,” Quillin said. “The timing of this IPO is crucial, and the next steps — especially in terms of addressing criticisms — could make or break its success.”
Shein has already begun informal roadshows in Europe, meeting with institutional investors to gauge interest in the IPO. Reports suggest that these meetings, led by Shein founder Sky Xu, are focused on explaining Shein’s growth prospects rather than launching an official IPO campaign. The company is still awaiting approval from the FCA, which will be critical in determining whether the IPO moves forward.
Next steps
On October 15, it was reported that Shein is enlisting more banks, like Barclays and UBS, to help with the London listing. Quillin said investment banks play several essential roles in an IPO, so these new relationships point to Shein moving closer to the actual floatation. “At an early stage in the process, investment banks play an important advisory role on the timing of the offering and how to structure the deal, and they manage relations with early investors and institutional buyers,” he said, adding that 2025 is the most likely date for a Shein IPO announcement.
“As the process moves on, investment banks will both price the IPO and act as underwriters in an IPO. In this role, they will purchase Shein’s shares and then sell them to the public,” said Quillin. “This ensures that Shein will raise the necessary capital from the sale of the shares.”
After the IPO, investment banks often play a role in stabilizing the share price in the early trading days. “This can involve buying back shares if the price falls below the offering price to reduce volatility,” he said. They may also provide research coverage and support to maintain investor interest in the stock.
