Fast Fashion Giant Shein Eyes London Stock Exchange Listing

Shein, fast fashion giant whose popularity soared during Covid, may soon cement its ties with the UK with plans to sell shares in the business on the London Stock Exchange.

The Chinese firm could file the relevant paperwork imminently, potentially valuing the company at $66bn (£51.7bn) which would be an enormous boost for the London Stock Exchange (LSE).

Shein’s formula of offering a large range of cheap clothes – backed up by campaigns with social media influencers – has turned it into one of the biggest fashion retailers in the world. The platform is set to launch in the UK and Germany later, although no date has been specified.

Given the environmental concerns around “fast fashion” the company launched a resale platform for shoppers in France on Monday, two years after the option first appeared for US customers.

The company is looking at the UK as a place to sell its shares after facing hurdles and intense scrutiny in the US. Shein relies on thousands of third-party suppliers, as well as contract manufacturers, near its headquarters in Guangzhou, China.

It is able to turn around a new item in a matter of weeks, having sped up the “test and repeat” model, first used by the likes of Zara owner Inditex, where companies place small orders of clothing items, see how they perform with shoppers before ordering more if they are a hit.

If Shein chose the UK over the US, it would be a significant boost for the City of London. A UK share listing generates significant business for the wider financial services industry that still makes up more than 10% of the UK’s entire economy.

The UK government has been scrambling to make the country more attractive for companies to set out their stall after London looks set to lose flagship names like Darktrace, Paddy Power-owner Flutter, and, recently, Royal Mail’s parent company IDS, due largely to valuations in the UK remaining stubbornly low relative to the country’s peers for many consecutive years.

Shein may choose to file the initial paperwork including the prospectus with the Financial Conduct Authority in the very near future. Filing a prospectus with the FCA is a required first step for any company that wishes to sell shares on the London Stock Exchange. The filing with the financial watchdog is a necessary first step but doesn’t guarantee that a float will go ahead.

The investigation by Swiss advocacy group Public Eye found that a number of staff across six sites in the manufacturing hub of Guangzhou were doing excessive overtime. According to the group, who interviewed a small sample of 13 employees from six factories in China supplying Shein, excessive overtime was common for many workers. The company told the BBC it was “working hard” to address the matters raised by the Public Eye report and had made “significant progress on enhancing conditions”.

Shein’s executive chairman Donald Tang is an American citizen who was a former banker for Bear Stearns in Asia and has met both Chancellor Jeremy Hunt and Jonathan Reynolds, the Labour (Co-op) shadow business secretary, in recent months to discuss the possibility of floating in London after hitting resistance from regulators and lawmakers in the US.

Poignantly, given the imminent election on July 4th in the UK, a Labour spokesperson said that it had met a range of companies, including Shein, “that are looking to invest or list in Britain”.

“We expect the highest regulatory standards and business practices from any company operating in the UK. We believe the best way to ensure this is to have more companies operating from and regulated by UK law,” the spokesperson added.

Given the company’s touted £50 billion plus valuation, it will make for fascinating watching to see where the behemoth eventually settles on listing.

(Source: BBC)

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