Shein’s IPO backup plans can unravel

Thread and thrum. Shein's IPO alternatives look drab. The fast-fashion retailer is eyeing London, Singapore, Hong Kong and other venues as its U.S. listing hits a snag, according to Bloomberg. Those venues might allow the profitable firm's backers to cash out faster. But if Shein is to hit its mooted $90 billion valuation target, New York still outshines the rest.

The China-founded company has been working toward a New York initial public offering since at least 2020. But fraying Sino-American ties and volatile markets have forced it to push back those plans several times. Despite founder Chris Xu's efforts to distance the Singapore-headquartered firm from its Chinese roots and diversify supply chains, Shein's latest attempt at a New York debut is now hitting several road blocks. Lawmakers in Washington are demanding more disclosure on its business operations and China risks; Beijing regulators are also vetting the offering.

A Plan B makes sense, then. Switching to London or another destination in Europe, where rivals like Sweden's H&M and Zara-owner Inditex trade, has some logic. The region is also one of Shein's largest markets. Asia's financial hubs will no doubt roll out the red carpet for Shein. Singapore boasts the region's most international major bourse with about 40% of listed firms coming from elsewhere while Hong Kong, despite the selloff in Chinese equities, is among Asia's biggest fundraising destinations. Both have not had multi-billion dollar listings in years.

For backers including Sequoia and General Atlantic that want a path to an exit, Shein's IPO choice presents a tricky dilemma. U.S. markets have outperformed, with the S&P 500 up 28% and the Nasdaq rising 40% over the past year. By contrast, benchmark indices across London, Singapore and Hong Kong are all down over the same period. Recent New York debuts have also delivered: Arm's stock has more than doubled since its September IPO while China-linked Amer Sports is up by a fifth. Shein's Plan A still looks the most attractive.