Singapore-based online fashion retailer Shein has reportedly filed confidential paperwork for an initial public offering (IPO) with the Financial Conduct Authority (FCA), the UK’s markets regulator. This move marks a significant step towards a potential blockbuster listing in London, following the company’s decision to abandon plans for a New York IPO.

Shein, which saw its popularity soar during the pandemic as online shopping surged, submitted the pre-listing documentation with the FCA this month, according to sources familiar with the matter. This filing paves the way for Shein, headquartered in Singapore, to release a formal IPO prospectus that would require FCA approval before the listing can proceed.

A key hurdle remains for Shein: securing approval from Chinese authorities for a London listing. The company, with a majority of its workforce and manufacturing base in China, faces potential regulatory roadblocks from Beijing.

Sources close to the company caution that Shein could choose to pursue an IPO elsewhere if it encounters regulatory difficulties in London or finds more favorable listing conditions in another market. Hong Kong is reportedly another potential option under consideration.

Shein’s shift towards London follows earlier plans for a New York IPO that were ultimately scrapped due to ongoing tensions between the US and China. Donald Tang, Shein’s executive chair, recently told the Financial Times that while the company has made progress in addressing concerns about Chinese control, it hasn’t been enough to satisfy US regulators.

A potential Shein IPO would be a significant boost for the London Stock Exchange. Senior UK politicians, including Chancellor Jeremy Hunt and Labour shadow business secretary Jonathan Reynolds, have reportedly met with Shein representatives in recent months.

Labour, currently leading in polls ahead of the July 4th general election, views a London listing favorably, arguing that it would subject Shein to stricter regulatory standards compared to other potential markets. Shein has previously faced allegations of forced labor in its supply chain, which the company vehemently denies while maintaining a “zero-tolerance policy for forced labor.”

Commenting on the potential London listing, Reynolds stated that regulating Shein from the UK would be ideal, given the company’s operations within the country. He believes a UK listing would ensure enforcement of the highest possible standards.

While supportive of the potential listing, Business Secretary Kemi Badenoch highlighted potential concerns regarding lost tax revenue due to Shein’s business model and the aforementioned forced labor allegations in China.

However, junior business minister Kevin Hollinrake countered these concerns, expressing that a Shein IPO would be a “prize” for the London Stock Exchange. He believes the UK’s modern slavery reporting requirements for companies would enhance Shein’s accountability. Both Shein and the FCA declined to comment on the reported filing.