Shein confidentially files for London IPO

Shein, the fast fashion giant with links to China, has confidentially filed for a public listing in London as it faces backlash in the U.S., a person familiar with the matter told CNBC.

The company had confidentially filed for a U.S. initial public offering in November but changed gears to London after it failed to win the support of American lawmakers. Elected officials in the U.S. have repeatedly expressed concerns about the use of forced labor in Shein’s supply chain and its use of a U.S. tax law exemption known as de minimis.

Shein would still prefer to go public in the U.S., sources previously told CNBC, and its filing in London doesn’t mean that an IPO will happen there. Shein had previously sought China’s approval to go public in the U.S. It’s unclear if Beijing has signed off on the London listing.

Shein, which was founded in China, has gone to great lengths to establish itself as a “global” company, moving its headquarters to Singapore in 2021. Still, the vast majority of its supply chain is still based in China, and the fact that it needed to seek Beijing’s approval to go public in the U.S. means regulators there view it as a Chinese company — and could exert control over its operations and data.

Shein’s London filing marks another twist in the company’s so-far long road to a public markets debut. It crashed onto the U.S. fashion scene during the Covid-19 pandemic and won over consumers with its ability to quickly offer the latest styles at rock bottom prices. It’s been a thorn in the side of U.S.-based competitors, which have ceded market share to the digital upstart and struggled to match its speed.

As Shein’s prominence in the U.S. grew, so did its ambitions to go public. It began waging a U.S. charm offensive as it sought to win the approval of lawmakers and the retail industry, but those efforts have not yet succeeded. Shein has applied for membership with the National Retail Federation, the industry’s largest trade association, multiple times and has repeatedly been rejected, CNBC reported.

It’s found itself caught in the crossfire of a tense geopolitical rivalry between the U.S. and Beijing. American lawmakers, concerned about the influence companies with Chinese links can have on the U.S. economy, ramped up their scrutiny of Shein after it filed to go public. Some elected officials at the federal and state level have called on the U.S. Securities and Exchange Commission to block the company’s listing because they say it would violate a U.S. law that bans the import of products made from the Xinjiang region in China, where the government has faced accusations of genocide against the Uyghur ethnic group.

Shein has acknowledged to CNBC that raw materials from banned regions have been found in its supply chain, but previous tests show that it’s done a better job, on average, of ridding such materials from its garments than the industry overall.

In May, the Wall Street Journal reported that Shein changed gears to London after the SEC told the retailer that its listing wouldn’t be accepted unless it made its filing public — a request that experts told the outlet was unusual. Typically, companies file to go public confidentially so they can protect sensitive information surrounding their operations and financials as regulators review the filing.

Even so, Shein’s executive chairman insists that its ambitions to go public are about transparency — not about raising capital.

“Most companies seek to go public for liquidity reasons,” Donald Tang told the outlet. “We seek to go public to embrace scrutiny and public diligence.”

— CNBC’s Sara Salinas contributed to this report