Shein begins plans for £50bn UK flotation

Shein, the controversial fast fashion giant whose popularity has soared during Covid, may soon strengthen its ties with the UK with plans to sell shares in the company on the London Stock Exchange.

The Chinese company could file the relevant paperwork as soon as this week, potentially valuing the company at $66bn (£51.7bn).

Shein’s formula of offering a wide range of cheap clothing – backed by campaigns with social media influencers – has turned it into one of the world’s largest fashion retailers.

But it has faced intense criticism over its environmental practices, as well as allegations surrounding the use of forced labor in its supply chain.

A spokesman for Shin declined to comment.

The platform is scheduled to launch in the UK and Germany later, although no date has been set.

The company is looking at the UK as a place to sell its shares after facing hurdles and intense scrutiny in the US. Sheen filed documents in the United States last November.

Some US lawmakers have raised concerns about Chen’s ties to China as tensions rise between Washington and Beijing.

Shein relies on thousands of third-party suppliers, as well as contract manufacturers, near its headquarters in Guangzhou, China.

It’s able to turn out a new item in a matter of weeks, after accelerating the “test and iterate” model, first used by the likes of Zara owner Inditex, where companies place small orders of clothing items, seeing how they perform with shoppers before ordering more if they’re a hit. .

If Sheen chooses the UK instead of the US, it will be a huge boost for London.

A UK stock listing generates significant business for the wider financial services industry which still accounts for more than 10% of the entire UK economy.

Shein may choose to file preliminary papers – known as a prospectus – with the Financial Conduct Authority this week, or it could happen later in June, the sources said.

Submitting a prospectus to the Financial Conduct Authority (FCA) is a required first step for any company wishing to sell its shares on the London Stock Exchange.

“This could be big news for the London stock market,” Colleen McHugh, chief investment officer at investment firm Wealthify, told the BBC’s Today programme.

But she acknowledged that the company may face some difficulties over allegations about how it runs its business.

Submitting an application to the Financial Supervision Authority is a necessary first step but does not guarantee that the flotation will continue.

“We have zero tolerance for forced labour,” Sheen told the BBC at the time.

An investigation by Swiss advocacy group Public Eye found that a number of employees at six sites in the Guangzhou manufacturing hub were working excessive overtime.

According to the group, which interviewed 13 employees from six factories in China that supply Shen, excessive overtime was common for many workers.

Sheen told the BBC that she was “working hard” to address the issues raised by the Public Eye report, and had made “significant progress in improving conditions”.

Regarding the London listing, Ms McHugh said: “It will be up to the regulator as to whether a listing can go ahead here or not. [in the UK] “But the matter will not be without controversy.”

Shen CEO Donald Tang is a US citizen and a former Bear Stearns banker in Asia.

He has met both Chancellor Jeremy Hunt and Jonathan Reynolds, the shadow business secretary, in recent months to discuss the possibility of a float in London after facing resistance from regulators and lawmakers in the United States.

A Labor spokesman said he had met a range of companies, including Sheen, “looking to invest or list in Britain”.

The spokesman added: “We expect the highest regulatory standards and business practices from any company operating in the UK. We believe the best way to ensure this is to have more companies operating within and regulated by UK law.”

The Treasury Department declined to comment.