A year after fast-fashion sensation Shein was first thought to have filed registration papers for a UK IPO, reports suggest the company is targeting the first quarter of 2025 for a London float that could value the business at £50 billion.

Shein’s position as a fast-growing retailer expanding across multiple geographies and taking market share from established players – it is no coincidence that the downswing in the fortunes of online fashion groups ASOS (ASC) and Boohoo (BOO:AIM) has occurred amid Shein’s meteoric rise - would have made it a no-brainer for fund managers under normal circumstances.

According to The Times, the e-commerce colossus’ founder Chris Xu and executive chair Donald Tang have begun meeting with investors in the UK to test appetites for the issue. They’ll no doubt be fielding questions from portfolio managers about the Singapore-based firm’s business practices, supply chains, corporate governance and alleged intellectual property infringement, after the company’s earlier US listing ambitions faced regulatory push back.

As AJ Bell investment director Russ Mould observes, there is an element of ‘it’s too good to be true’ with Shein: ‘Many people think there is a catch with how it is able to sell goods so cheaply – namely that it is using a supply chain that relies on workers that are poorly paid and poorly treated,’ says Mould. ‘Shein will need to rigorously prove this is not the case if it is to win over investors for the IPO.’

Decelerating sales growth is another cause for concern at Shein, which has seen intense competition from Chinese online marketplace Temu, a bargain shopping platform owned by PDD Holdings (PDD:NASDAQ) which is growing in popularity in the US.

In a bid to take on Shein and Temu, Amazon (AMZN:NASDAQ) has launched ‘Amazon Haul’, a store available on its mobile app which also offers cheap goods, predominantly shipped from China, at ‘crazy low prices’.

Haul’s broad selection of products are on sale at $20 (£15.80) or less, with most under $10, and its launch could help to keep the growth of Shein and Temu in check. However, this is an uncertain time for Amazon to invest in such a business model, since president-elect Donald Trump has proposed leveraging a 60% tax on goods imported from China. 

DISCLAIMER: Financial services company AJ Bell referenced in this article owns Shares magazine. The author of this article (James Crux) and the editor (Tom Sieber) own shares in AJ Bell.

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