Shein IPO in 2024? Not so Fast, Says U.S. Congress
Shein IPO in 2024? Not so Fast, Says U.S. Congress
If allegations of forced labor are proven true, the fast-fashion retailer can’t list stock on U.S. exchanges
- Shein is filing for a confidential IPO, according to The Wall Street Journal.
- Several banks, including Goldman Sachs, have been recruited to list shares.
- Congress, led by several high-powered lawmakers, is pushing back.
Shein files for confidential IPO
Shein, the Chinese fast-fashion giant founded in 2008, has filed for a confidential initial public offering (IPO), according to The Wall Street Journal. This puts the company on track to debut new shares publicly sometime in 2024.
The Securities and Exchange Commission (SEC) allows companies to file confidentially for an IPO, although it does require the information to be made publicly available within 15 days of the offering.
According to media reports, Goldman Sachs (GS), JPMorgan Chase (JPM) and Morgan Stanley (MS) will lead the IPO as its primary underwriters. So far, however, these banks and Shein itself have declined to comment on the suspected IPO.
The size of the offering also remains under wraps, although earlier reports put the price tag at about $90 billion. That would make it one of the most substantial IPOs in recent memory, but it would still pale in comparison to the Alibaba Group (BABA) $231 billion offering back in 2014.
Not so fast, says Congress
Shein must still get past several barriers that could prevent the company from listing on U.S. exchanges. First, the company would need approval from the China Securities Regulatory Commission (CSRC) before moving forward with its off-shore listing.
Second, and probably a bigger hurdle, is the United States Congress. Some legislators have cast doubt on Shein and its alleged use of forced labor to make its products—something that would prevent the company from listing in the U.S. if proven true.
However, several high-powered lawmakers are becoming increasingly vocal in light of recent news. Rep. Blaine Luetkemeyer (R-Mo.), who chairs the subcommittee on National Security, Illicit Finance and International Financial Institutions, pushed back on the proposed listing.
Congressman Luetkemeyer said the Securities and Exchange Commission needs to “do their job” to stop Shein from listing on U.S. exchanges. His admonition came during a CNBC interview last week, and he cited forced labor practices and exploitation of U.S. trade laws.
Luetkemeyer also threatened to take legislative action should the SEC bless Shein’s IPO, including a ban on its shipments into the United States, but he also said all options are on the table.
Some reassurance
Banks like Goldman Sachs usually wouldn’t involve themselves with a potential listing if they didn’t have some confidence the company could navigate these headwinds That suggests the Shein IPO may occur next year. Only time will tell, however.
Thomas Westwater, a tastylive financial writer and analyst, has eight years of markets and trading experience. @fxwestwater
For live daily programming, market news and commentary, visit tastylive or the YouTube channels tastylive (for options traders), and tastyliveTrending for stocks, futures, forex & macro.
Trade with a better broker, open a tastytrade account today. tastylive, Inc. and tastytrade, Inc. are separate but affiliated companies.
Options involve risk and are not suitable for all investors. Please read Characteristics and Risks of Standardized Options before deciding to invest in options.