Shein Filed For London IPO, But Some Investors Are Cautious

Fast-fashion giant Shein has confidentially filed for a potential IPO on the London Stock Exchange later this year, according to reports.

Shein's initial plan was for a New York listing. However, due to its links to China, it faced opposition in the US and failed to win the support of US lawmakers.

While the company has filed in London, CNBC stated that its source told them Shein would still prefer to go public in the US and that the London filing doesn't mean that an IPO will happen there.

The company, valued at $66 billion, needs approval from both Chinese and British regulators before moving forward. If approved, Shein's IPO process could take several months to complete.

Despite some of the positives the IPO may bring to the London market, Reuters reported last week that some ESG investors are concerned it could damage the London Stock Exchange's reputation.

Kunal Kothari, a UK equities fund manager at Aviva Investors, told the publication that “where there is widespread scepticism on an investment, there is sometimes opportunity, but we would approach this cautiously.”

He noted a 2022 Shein impcat report which showed over 80% of the company's supplier facilities had at least one major risk with corrective action required. This is “too high a number, but at least we can now monitor progress,” Kothari said.

Meanwhile, Joshua Sherrard-Bewhay, an ESG analyst at investment platform Hargreaves Lansdown, said Shein carries risks in almost all ESG areas. “Any investor in Shein must be aware of these risks, and equally be sure the company satisfies basic governance requirements around transparency and reporting, another area where Shein falls short,” he told Reuters.