US stock markets may be booming, but the IPO market remains frozen, said The Economist: “For two long years, private companies have spurned the public markets.”
A big hope for Wall Street bankers is Shein, the outsized fast-fashion giant that confidentially filed to go public in the U.S. in November – and even teased London about a possible listing. “Shein is a worthwhile financial prize,” said the Financial Times.
“One of the largest IPOs of 2024”
With a recent value of $64 billion (more than competitors Zara and H&M combined), it would be “one of the largest IPOs of 2024.” But concerns are growing about the Singapore-based company's Chinese roots and human rights abuses in its supply chain.
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The latest problem, Gabrielle Fonrouge said on CNBC, was due to China's powerful Internet regulator CAC announcing a preliminary “security review.” This clearly positions Shein as a Chinese company, despite the company's efforts to distance itself. The move brings back bad memories of DiDi Global, the ride-hailing giant that faced similar scrutiny days after its New York IPO in 2021.
“Sustainability an ultimate IPO risk”
Within a year it was “delisted and shareholder value destroyed.” Shein – which has never sold clothing in China but sources many of its products there – is facing criticism from “both sides”. Both Washington and Beijing fear that “sensitive data” about customers, employees and partners could be passed on to the other side.
Geopolitics aside, Shein's IPO hopes face a “stubborn challenge,” said Lisa Jucca at Reuters Breakingviews: Sustainability. Across fast fashion retail, there are many carbon-intensive, difficult-to-recycle polyester-based garments. Shein's sheer size takes the problem to another level; The growing unease about “textile pollution” is making it difficult to fight back. “Shein’s waste factor is the ultimate IPO risk.”
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