Fast-fashion giant Shein is encountering roadblocks in its initial public offering (IPO) plans, with a recent disclosure error in the UK and concerns over US approval throwing a wrench into the process.
Disclosure error in the UK
Shein’s UK business, Shein Distribution UK, failed to disclose its ultimate human owner, a legal requirement known as a ‘person with significant control’ (PSC).
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The company mistakenly listed a Singapore-based company, Roadget Business, as its PSC instead of an individual.
This error was flagged by Dan Neidle, founder of think tank Tax Policy Associates, who emphasised the potential criminal implications of knowingly filing false information.
Shein acknowledged the error, stating it was not shown in the ‘company’s registration process’ and is working to rectify it.
Shifting focus to London listing
While Shein pursues a resolution to the disclosure issue, the company is reportedly exploring a potential listing on the London Stock Exchange (LSE).
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By GlobalDataThe UK’s chancellor, Jeremy Hunt, met with Shein executive chair Donald Tang in February 2024 to discuss an IPO in London, and the discussions were ‘productive’, Sky News reported.
This shift in focus comes amidst concerns that the US Securities and Exchange Commission might not approve an IPO in the country.
Shein’s consideration of London aligns with the UK government’s recent efforts to strengthen its position as a global financial centre, following a string of companies choosing US listings over London.
Potential boost for London, but questions linger
A potential Shein listing in London would be a significant win for the city, potentially raising its financial standing.
However, concerns remain regarding Shein’s transparency, particularly in light of the disclosure error.
Additionally, the company has faced allegations of labour abuse in its supplier factories, raising questions about its ethical practices.
These issues will likely be scrutinised further as Shein navigates its IPO journey.
While the company aims to rectify the disclosure error and explore alternative listing options, the path forward for Shein’s IPO remains uncertain.
The company’s efforts to navigate these challenges will be closely watched, with both potential rewards and lingering questions on the horizon.
