The IPO process of Shein is facing delays due to supply chain oversight challenges.
- The UK’s Financial Conduct Authority is investigating Shein’s supply chain and potential legal risks.
- Concerns over labour practices at Shein’s suppliers have been raised by Britain’s Anti-Slavery Commissioner.
- Approval is also pending from China’s securities regulator for Shein’s IPO in London.
- Shein aims to launch a £50bn IPO in the first quarter of next year, pending approvals.
Shein, a major player in the fast fashion industry, is experiencing delays in its Initial Public Offering (IPO) as it awaits approval from the UK’s Financial Conduct Authority (FCA). The regulatory body is thoroughly examining Shein’s supply chain management and evaluating associated legal risks. This scrutiny follows challenges posed by advocacy groups, particularly regarding the use of cotton potentially linked to forced labour in China’s Xinjiang region.
The advocacy group Stop Uyghur Genocide (SUG) has been a vocal critic, filing a legal challenge in June and subsequently submitting a detailed dossier to the FCA in August. The group’s claims centre around allegations that Shein’s supply chain includes cotton sourced from regions in China known for forced labour practices, raising significant ethical and legal questions.
Britain’s Independent Anti-Slavery Commissioner has also expressed reservations about proceeding with a Shein IPO on the London Stock Exchange, citing concerns over the labour practices of the company’s suppliers. These considerations have brought Shein’s operational ethics under closer governmental scrutiny.
In addition to UK regulatory hurdles, Shein is also seeking approval from Chinese authorities for the IPO. Reports suggest that clearance from China’s securities regulator is likely to follow the FCA’s decision. The outcome of these evaluations will play a crucial role in determining the future trajectory of Shein’s planned public offering.
Despite these challenges, Shein is optimistic about launching its IPO, which is estimated to value the company at £50 billion, in the first quarter of the coming year. The fashion retailer has shown significant growth, overtaking its competitor Boohoo by doubling its pre-tax profits for its UK operations to £24.4 million for the year ending December compared to Boohoo’s financial performance.
Shein’s IPO awaits critical regulatory approvals amidst ongoing scrutiny of its supply chain practices.
