As Shares goes to press, reports suggest online fast-fashion behemoth Shein is preparing an IPO (initial public offering) on the London Stock Exchange after its attempt to list in New York faced opposition from US lawmakers due to perceived China links.

The IPO could value the fashion group at around £50 billion, making Shein the biggest-ever IPO in London by value, topping the £36.3 billion tag ascribed to commodities giant Glencore (GLEN) in 2011.

Shein’s IPO, which is expected to raise over £1 billion of new money for the company ahead of a summer or early autumn debut, would be welcome news for the London market amid the recent dearth of flotations.

But Shein’s debut will send shivers down the spines of peers such as Inditex (BME:ITX) and H&M (HM-B:STO) and embattled online-only rivals ASOS (ASC) and Boohoo (BOO:AIM).

Valued at $66 billion in its last fundraising, Shein originally launched as ‘SheInside’ in China in 2011 and its meteoric rise, powered by the sale of low-cost garments, has stunned the world of fast fashion. Alongside changing shopping habits and a cost-of-living crisis, Shein’s meteroric rise is one of the factors that has hurt sales at UK-listed fast-fashion duo ASOS and Boohoo.

The disruptive company’s annual profits more than doubled to $2 billion-plus in 2023 and caked-up with cash post IPO, Shein will present an even more formidable competitive threat to ASOS and Boohoo. Smart in its use of social media, Shein has the ability to turn around new items rapidly to suit the shifting tastes of fashionistas.

Fund managers who do back the float will hope Shein can emulate the stock market success of PDD Holdings (PDD:NASDAQ), the owner of rival cut-price clothing site Temu. Shares in PDD are up almost 650% over five years, reflecting the exceptional growth being delivered by Temu, which is growing like topsy in the US and expanding across Australasia, Europe and the UK.

However, Singapore-headquartered Shein’s float poses a conundrum for sustainability-focused investors given concerns about its governance, supply chain and business practices. Shein has been at the centre of controversy surrounding its use of cotton from China’s Xinjiang region and other issues related to workers’ rights and its sprawling supply chain.

Joining the public markets would only put the spotlight on these issues. It will be interesting to see if the company opts for a standard or a premium listing. The latter would allow it to join FTSE indices but bring greater levels of scrutiny and increased governance demands.

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