Shein confidentially files for IPO in London

Fast fashion powerhouse Shein is in focus this morning following a report that it has confidentially filed for an initial public offering in London. 

The move could potentially value the retail firm at about $66 billion.

Why is Shein opting for a London IPO

Anonymous sources told CNBC today that Singapore-headquartered Shein is now confidentially attempting to list on the London Stock Exchange. 

It had previously submitted a confidential filing for the U.S. IPO as well in pursuit of expanding its global footprint. The retail firm, however, faced significant challenges including controversies in its efforts to list in the United States. 

For one, Shein faced allegations of forced labour that resulted in intense scrutiny not just from the regulators but from human rights organisations as well. 

There have also been concerns related to its use of a certain U.S. tax law exemption that further placed its business practices under the microscope.

Other challenges Shein has faced in the U.S.

Shein has repeatedly sought membership in the National Retail Federation - the largest trade association within the retail industry. 

Still, it has faced nothing but rejection from the NRF so far, potentially signalling broader concerns about its operations and reputation at large. 

In fact, experts are now of the opinion that the aforementioned challenges have made a U.S. listing increasingly improbable for Shein. The decision to pursue a London listing could, therefore, be seen as a strategic move to circumvent some of the anticipated hurdles in the U.S. market. 

The London Stock Exchange is known for diverse listings and may offer Shein a more amenable environment for its public debt. 

Why does Shein want to go public?

Opting for a London IPO could potentially enable Shein to access the global capital markets while facing less intense scrutiny that it might have in the U.S. 

Note that the fast fashion retailer had previously asked China for its approval to list in the United States. Whether Beijing has agreed to it going public in London remains unknown. 

It is also worth mentioning here that Shein is not attempting to go public to raise capital. Its ambition to list is about transparency instead, as per its executive chairman Donald Tang. 

The news arrives about a couple months after the Financial Times cited people familiar with the matter and said Shein more than doubled its profit last year to a record $2.0 billion.