Shane confidentially files for London IPO

SHEIN, the fast-fashion giant with ties to China, has filed for a private listing in London as it faces backlash in the United States, a person familiar with the matter told CNBC.

The company had privately filed for a U.S. initial public offering in November but pivoted to London after failing to win support from U.S. lawmakers, who have repeatedly raised concerns about Shain’s use of forced labor in its supply chain and the company’s use of an exemption under U.S. tax law known as de minimis.

Sources previously told CNBC that Shein still wants to list in the U.S., and the London filing does not mean the IPO will take place in London. Shein had previously sought Chinese approval to list in the U.S. It is unclear whether Beijing has approved the London listing.

Founded in China, SHEIN has made significant efforts to position itself as a “global” company, including moving its headquarters to Singapore in 2021. But a large portion of its supply chain is still based in China, and the fact that it had to get Beijing’s approval to go public in the U.S. means that U.S. regulators may view it as a Chinese company and gain control over its operations and data.

Shein’s filing for a London listing marks the latest development in the company’s long road to becoming public. The company burst onto the U.S. fashion scene during the coronavirus pandemic, luring consumers with its ability to quickly deliver the latest styles at ultra-low prices. It’s been a thorn in the side of U.S.-based competitors, which have struggled to keep up after ceding market share to the digital upstart.

As Shein’s profile in the U.S. has grown, so have its ambitions to go public. The company has launched a charm offensive in the U.S., trying to win the approval of lawmakers and the retail industry, but its efforts have yet to succeed. CNBC reported that Shein has repeatedly applied to join the National Retail Federation, the industry’s largest trade group, but has been repeatedly rejected.

The company is caught in the middle of a tense geopolitical standoff between the United States and Beijing. US lawmakers, concerned about the impact of China-linked companies on the US economy, stepped up scrutiny of SHEIN after it filed for an IPO. Federal and state elected officials urged the US Securities and Exchange Commission to block the listing, arguing it violates US law banning the import of products made in China’s Xinjiang region, where the government faces accusations of genocide against the Uighur ethnic group.

Shein acknowledged to CNBC that materials from banned regions have been found in its supply chain, but tests so far have shown that, on average, Shein has done a better job of keeping such materials out of its clothing than the industry as a whole.

The Wall Street Journal reported in May that Schein had pivoted to London after the SEC told the company it wouldn’t be allowed to go public unless it made its IPO application public. Experts told the Journal that the requirement was unusual. Typically, companies file their IPO applications in private to protect sensitive business and financial information when regulators review the applications.

Still, Schein’s chairman insists the company is seeking to go public for the sake of transparency, not to raise capital.

“Most companies go public to secure liquidity,” Donald Tang told the outlet. “We go public to open up scrutiny and public due diligence.”

—CNBC’s Sara Salinas contributed to this report