A shopper carries bags with promotional merchandise while visiting fashion retailer Shein’s Christmas bus tour, in Manchester, Britain, December 13, 2024.
Temilade Adelaja | Reuters
Online fast fashion giant Shein has confidentially filed for an initial public offering in Hong Kong in a bid to apply pressure on U.K. regulators and accelerate its long embattled listing ambitions, according to the Financial Times.
The Chinese-founded, Singapore-based retailer privately submitted a draft prospectus last week with the Hong Kong exchange (HKEX) and courted the approval of the China Securities Regulatory Commission (CSRC), two sources familiar with the matter told the newspaper.
The HKEX said it does not comment on individual companies when contacted by CNBC. The U.K. Financial Conduct Authority and London Stock Exchange declined to comment when contacted by CNBC, while the CSRC did not immediately respond.
Shein previously filed to list in London around 18 months prior, but has struggled to receive regulatory approval and in May reportedly shifted its focus to Hong Kong.
U.K. and Chinese regulators have so far failed to agree on the appropriate language for the risk disclosure section of the company’s prospectus.
These provisions relate to Shein’s supply chain exposure in China’s Xinjiang region, which has been heavily scrutinized over alleged human rights abuses against its indigenous Uyghur population. Chinese authorities have denied the claims.
The U.K.’s FCA approved a version of Shein’s prospectus earlier this year but the draft was not accepted by the CSRC, which has grown stricter on how companies describe the risks of operating in China.
A time to pivot
A London listing had been seen as a boon for the nearly 17-year-old Chinese-founded company, providing international legitimacy and access to a deep and mature pool of Western investors.
Shein’s high-profile listing was also expected to provide a much needed boost to the U.K.’s lackluster IPO market after a string of delistings and defections.
Samuel Kerr, head of global equity capital markets at Mergermarket, told CNBC that Shein’s continued pursuit of a London listing marked a vote of confidence in the U.K. market.
“This goes a little way to reversing some of the narrative around London’s decline given such a large international business is so determined to pursue a listing on the exchange,” he said via email.
However, analysts also voiced skepticism over whether Chinese approval would be enough to force the U.K. regulator’s hand to grant similar concessions.
“Even if it has been approved by Chinese Authorities, approval by the FCA would still need to go through all its processes, so a London listing still has a number of hurdles,” Susannah Streeter, head of money and markets at Hargreaves Lansdown, told CNBC by email.
“The Financial Conduct Authority has a responsibility to protect investors against issues which could be detrimental to their interests,” she continued.
James Alexander, CEO of the U.K. Sustainable Investment and Finance Association, agreed that London must “uphold strong governance standards,” adding that “any erosion of this would be detrimental to investors.”
Still, Streeter suggested that continued pressure from the U.K. regulator could provide the impetus required to accelerate changes within the company.
“ESG laggards come with high ESG risks, however there is an argument that investment opportunity lies in transformation. A Shein listing could make the firm more transparent and accountable to shareholders who could engage with the firm to improve standards,” she said.
Shein has faced an uphill battle in its listing ambitions, last year shifting its attention from a New York listing to London after facing continued pushback on such issues from U.S. lawmakers.
Meanwhile, concern over its commercial practices prompted an EU investigation, which in May found the company in breach of consumer protection laws, including the use of fake discounts, pressure selling and misleading shoppers over sustainability claims.
The closure in May of the U.S.’s de minimis loophole for low-cost goods — and possible similar measures by the EU and the U.K. — have only added to the company’s woes.
