Founded in China, Shein has become a significant player in the fast-fashion retail space, known for offering affordable apparel, including $5 tops and $10 dresses.
The company’s recent growth trajectory has sparked interest among investors, and it is looking to capitalize on this momentum through its upcoming IPO.
According to three sources familiar with the matter, Shein plans to conduct informal roadshows primarily across Europe.
During these roadshows, the company will engage with large institutional investors, answering their questions and gauging their appetite for investment.
The informal nature of these meetings allows Shein to present its business model and financial health directly to potential investors, fostering relationships that could prove vital during the IPO process.
The sources, who requested anonymity due to the sensitive nature of the discussions, noted that these meetings are crucial as Shein aims to build confidence among investors regarding its growth strategy and operational sustainability.
A spokesperson for Shein, headquartered in Singapore, declined to provide comments regarding the upcoming roadshows, reflecting the company’s cautious approach as it navigates this critical phase.
In early June, Shein confidentially submitted documents to Britain’s financial markets regulator, initiating the process for a potential London listing later this year.
This move follows a previous attempt to launch an IPO in the United States, which faced significant hurdles due to political opposition from U.S. lawmakers.
As Shein pivots towards London, the company aims to secure a valuation that reflects its substantial market presence, which was pegged at $66 billion during a fundraising round last year.
Despite the optimistic outlook for the IPO, Shein is under increasing scrutiny regarding its treatment of workers and environmental practices.
As it prepares for its market debut, the fast-growing company must demonstrate its commitment to ethical practices, as these factors could influence investor sentiment and overall success.
Shein’s efforts to launch its IPO in the current quarter hinge on receiving approval from the Financial Conduct Authority (FCA), the UK’s financial watchdog.
A separate source familiar with the matter indicated that the company is working diligently towards this goal, although the timeline remains uncertain.
Analysts believe that Shein’s ability to convince large institutional investors of its financial soundness and growth potential will be crucial in determining the IPO’s success.
The company faces stiff competition from other European markets, and its valuation will need to reflect its position in a rapidly changing retail landscape.
Additionally, Shein’s plans for a London listing come amid a challenging environment for IPOs in the UK. According to Dealogic data, the UK has seen only nine new listings this year, compared to 18 in 2023.
This places the UK behind other European nations and ranks it 10th among venues for listings in Europe, the Middle East, and Africa in terms of IPO value.
In response to these challenges, Britain’s markets watchdog has implemented new rules to encourage companies to list on the London Stock Exchange, hoping to close the gap with major financial centers like New York and the European Union post-Brexit.
Shein’s entry into the London market could provide a much-needed boost to the IPO landscape, which has struggled to attract new listings.
However, Shein also faces pushback from several European governments. Last week, Germany, Austria, Denmark, France, and the Netherlands jointly urged EU authorities to enforce standards on online platforms, expressing support for scrapping the duty exemption on parcels worth less than 150 euros.
This move could potentially impact Shein’s profitability, as investors are concerned about the implications of such regulatory changes.
As Shein navigates the complexities of its IPO process and investor roadshows, the company’s future in the competitive retail space remains uncertain.
The success of its London listing will largely depend on its ability to effectively communicate its business model, address regulatory concerns, and maintain investor confidence amid growing scrutiny of its operational practices.
