Chinese fast fashion company Shein has confidentially filed to go public in the US in a move that could be one of the biggest IPOs in years.
Banking giants JPMorgan Chase, Goldman Sachs and Morgan Stanley have been tasked as lead underwriters on the deal that could happen next year, according to The Wall Street Journal.
Shein, which was founded in Nanjing but is now based in Singapore, was recently valued at $66billion following a fundraising round in May.
It has dominated the world’s clothing industry over the last few years with cheap and trending fashion items including $5 skirts and $9 jeans.
Chinese fast fashion company Shein has confidentially filed to go public in the US in a move which could be one of the biggest IPOs in years
It has dominated the world’s clothing industry over the last few years with cheap and trending fashion items including $5 skirts and $9 jeans
But the Chinese retailer has been criticized over allegations of workers in supply chains being exploited and the negative environmental impacts of fast fashion
Chinese media reported on Shein’s confidential filing in the US earlier. But it has been a difficult two years for the country’s IPO market.
Few companies have listed their shares in the US due to the high interest rates and other less-risky investments.
Most of those which have gone public have performed poorly. The biggest IPO this year was British chip designer Arm Holdings which debuted in September and was valued at around $55billion.
Expert bankers and advisers expect more companies to go public next year but have warned the pickup may be slow.
Last year, Shein recorded $23billion in revenue and $800million in net profit. It also told investors it delivered record revenue and income for the first three quarters of 2023, according to The Wall Street Journal.
SEC rules allow firms to keep listing documents privately for a certain period ahead of their IPOs.
Shein will reveal them in the weeks before its offering and the documents will include details about its financials.
The Chinese retailer sells its items online to shoppers in more than 150 countries but this does not include China. The US is the company’s largest market.
It recently purchased a stake in the operator of retailer Forever 21 in a move which will allow it to sell its items in physical stores. It also bought British women’s fashion brand Missguided.
Shein could become the biggest US stock offering for a company that originated in China since ride-hailing company Didi Global’s 2021 IPO.
Didi was valued at $68.4billion on the day it debuted but was delisted from the New York Stock Exchange 11 months later after being caught in Beijing’s tech crackdown.
Shein’s supply chain has mostly been based in the southern Guangdong region. It subcontracts thousands of factories and makes orders in small quantities to test demand before it makes large orders.
The Chinese fashion company has come under increased scrutiny over its supply chain.
Shein has partnered with celebrities including Khloe Kardashian
Shein’s supply chain has mostly been based in the southern Guangdong region. It subcontracts thousands of factories and makes orders in small quantities to test demand before it makes large orders
Two landmark investigations into the company – by the Swiss human rights advocacy group Public Eye in 2021, and by British broadcaster Channel 4 last year– found consistent examples of workers in this supply chain being exploited.
Contrary to Chinese labor laws, which limit the working week to 40 hours, undercover reporters in both investigations found workers under pressure to complete orders that took up to 18 hours a day.
They had no defined work patterns and were given one day off a month.
Channel 4’s documentary Untold: Inside the Shein Machine secretly filmed inside two Shein suppliers and found workers were paid piecemeal for their part in producing a garment.
They received as little as 2p per item and were required to complete an average of at least 500 a day before being guaranteed the payments they were owed at the end of the month.
US lawmakers and attorneys general have asked for an investigation of the company’s supply chain as a condition for a US stock listing
If they made a mistake, as much as three-quarters of their day’s income was deducted.
Public Eye’s Toiling Away for Shein report featured interviews with ten workers from six factories supplying Shein.
Many of their claims about pay and hours were similar to those Channel 4 would find a year later, suggesting nothing had improved.
At the time, a Shein spokesman said: ‘We are extremely concerned by the claims presented by Channel 4, which would violate the Code of Conduct agreed to by every SHEIN supplier.
‘Any non-compliance with this code is dealt with swiftly, and we will terminate partnerships that do not meet our standards.
‘SHEIN’s Responsible Sourcing standards hold our manufacturing suppliers to a code of conduct based on International Labor Organization conventions and local laws and regulations governing labor practices and working conditions.’
Lawmakers in the US have also pressed Shein to address whether it sources cotton from China’s Xinjiang region where China is accused of committing genocide and using forced labor to repress the mostly Muslim Uyghur population. But Beijing denies these allegations.
Shein has said it has a ‘zero-tolerance policy’ for forced labor and insists it has a ‘robust system’ in place to comply with American law.
It previously said it does not source cotton from China and does not have manufacturers in the Xinjiang region.
US lawmakers and attorneys general have asked for an investigation of the company’s supply chain as a condition for a US stock listing.
Shein has started manufacturing products in Turkey and Brazil and entered a partnership with a major Indian retailer.