China-based fashion giant Shein may have confidentially filed for an initial public offering (IPO) in the United States, according to a report by Wall Street Journal and both publications have cited anonymous sources backing the claim. As per the reports, Goldman Sachs, JPMorgan Chase, and Morgan Stanley have been enlisted as lead underwriters for the offering, with a potential IPO date in 2024.
Shein, valued at over $60 billion in May, is poised to become the most valuable China-founded company to go public in the US since Didi Global in 2021. It has disrupted the US fashion market, challenging established brands like Gap, and recently partnered with SPARC Group to expand its market reach. However, the move comes amid a challenging landscape for IPOs in the US, with recent major offerings, including Birkenstock, Instacart, and Arm Holdings, experiencing lackluster performances post-debut.
In the past, Shein has faced increased scrutiny from US lawmakers regarding its supply chain practices. The company has faced accusations of forced labour, labour law violations, environmental harm, and design theft. The company is under investigation by the House Select Committee on the Chinese Communist Party who have accused the company of evading US tariff law. The company’s direct shipping strategy from China allowed it to bypass unsold inventory issues and US import taxes. The Securities and Exchange Commission (SEC) has also urged the firm to align its practices with US standards.
Shein CEO Sky Xu also remains an elusive figure who does not give interviews or public statements about the company. This lack of transparency, along with questions regarding Xu’s nationality, has also raised issues of trust among US regulators.
Shein, now headquartered in Singapore, is reportedly cooperating with lawmakers and addressing concerns. Its confidential filing allows communication with the SEC to make necessary adjustments privately. According to a report by CNBC, over the coming months, Shein is expected to refine its paperwork and respond to SEC queries. The filing will be made public when the company is ready to proceed with the IPO.
Shein was famously banned in India along with 58 other apps in June 2020 by the Government of India, may also be returning to the country through a partnership with Reliance Retail. The ban on Shein and other Chinese apps came after a border dispute between India and China in mid-2020, however, since it is now headquartered in Singapore, it may no longer be considered a Chinese entity. Through this partnership, Shein will have access to Reliance Retail’s sourcing capabilities, warehousing, and logistics infrastructure and access to their portfolio of online and offline stores, adding to the company’s global expansion.
Source: Business Standard