Shein, a fast fashion retailer based in Singapore, has filed for an initial public offering (IPO) in Hong Kong, as reported by the Financial Times.

The company submitted a draft prospectus to the Hong Kong Stock Exchange (HKEX) last week and is seeking approval from the China Securities Regulatory Commission (CSRC).

Shein previously aimed for a London IPO but faced regulatory hurdles.

Shein has faced scrutiny over allegations regarding labor practices in its supply chain, which it denies.

These concerns led the company to abandon plans for a New York listing following pressure from US lawmakers.

🔗 Source: CNBC

🧠 Food for thought

1️⃣ A tumultuous IPO journey reflecting shifting valuations

Shein’s path to going public reveals extraordinary volatility in its perceived market value over a relatively short period.

In 2021-2022, the company was reportedly exploring a US listing at a valuation of approximately $47 billion, which would have surpassed Alibaba’s previous IPO record 12.

By April 2022, Shein was reportedly seeking funding at a valuation of $100 billion, exceeding the combined market capitalization of established competitors Zara and H&M 3.

However, this upward trajectory didn’t last, with private market valuations reportedly dropping by $30 billion just months later in July 2022, highlighting investor concerns about market conditions and the company’s business model 4.

This pattern of repeatedly shifting listing locations, from the US to London to Hong Kong, demonstrates the regulatory challenges faced by companies with Chinese origins seeking to access Western capital markets.

2️⃣ Supply chain controversies creating material business risks

Shein’s IPO ambitions have been directly hampered by documented labor violations that create both regulatory and reputational obstacles.

The company’s own 2023 sustainability audit confirmed two cases of child labor within its supply chain, forcing it to temporarily suspend orders from those suppliers 56.

Recent Shein developments