Shein jumps hurdles securing regulatory approval for London IPO

Fast-fashion powerhouse Shein has cleared a major hurdle in its plans to go public, gaining approval from the UK’s Financial Conduct Authority (FCA) for a London Stock Exchange listing.

The FCA approval is a significant step forward for the Singapore-headquartered company, originally founded in China, which confidentially filed with the UK regulator in June 2023. However, Shein still needs the green light from Chinese authorities, including the China Securities Regulatory Commission (CSRC), before it can move forward with its IPO.

The company reportedly informed the CSRC of the FCA approval in recent weeks but has yet to receive formal clearance from Beijing, according to Reuters.

Shein, which was valued at $66 billion in its last fundraising round in 2023, does not own or operate any manufacturing facilities, and instead sources its products from around 5,800 third-party contract manufacturers mainly in China, subjecting it to the CSRC's listing rules. A host of authorities, such as the National Development and Reform Commission and others, may get involved in approving offshore IPO applications.

Last month, the company's Executive Chairman confirmed plans for a public listing for the first time. Donald Tang, Executive Chairman, told The Times that Shein wanted to be a public company "to embrace the … accountability and transparency of being a public company".

Shein has not previously publicly confirmed plans for an IPO but has been put under the microscope by politicians and campaigners over its labour practices and environmental impact.

The company has faced allegations that some of the clothes it sells contain cotton sourced from the northwestern region of Xinjiang, where China has been accused of subjecting members of the Uyghur minority group to forced labour and genocide.

Tang rejected allegations that Shein exploited workers and damaged the environment, saying the company was "democratising" the mass global fashion industry.

However, the company thrives on a tax loophole otherwise known as the "de minimis" rule. Shein has been profiting from sending small packages from China to Western countries by utilising tax exemptions that mean that they do not have to pay import duties on small packages. However, its prospects have become cloudy in recent months as the Trump administration axed the de minimis duty exemption for shipments from China and Hong Kong, effective 2 May.

The measure's removal could force it to hike prices in the US, its biggest market, though the change has been expected, and Shein has sought to adapt by adding suppliers in Brazil and Turkey.

This hurdle could delay the fast-fashion group's original IPO schedule to the second half of the year, said sources. Shein's eventual IPO valuation will hinge on the impact of the de minimis termination on its business.

Shein has been contacted for comment.