Shein Turns to London: LSE’s Largest Fashion IPO?

In early June, the fast fashion retailer Shein took a significant step towards listing on the London Stock Exchange by confidentially filing papers with Britain’s markets regulator. This move, according to sources familiar with the matter, initiates the process for a potential London listing by the end of the year.

Shein, a company that originated in China and was valued at $66 billion during a fundraising round last year, had initially planned to list in New York. However, these plans were derailed due to opposition from U.S. lawmakers. With the London listing now in sight, the company hopes to overcome these hurdles.

When approached, spokespeople for both Shein and the Financial Conduct Authority (FCA), Britain’s markets watchdog, declined to comment on the matter. The sources, who provided insights into the deal, also chose to remain anonymous as they were not authorized to speak to the media.

The timing for Shein’s Initial Public Offering (IPO) remains uncertain. Known for its budget-friendly fashion items like $5 tops and $10 dresses, Shein has officially informed China’s securities regulator about the change in its listing venue. However, the company is still waiting for approval from the China Securities Regulatory Commission (CSRC).

The CSRC did not immediately respond to a request for comment from Reuters. The FCA, on the other hand, typically takes a couple of months to vet and decide on clearance for such filings. Should both the FCA and CSRC give their green light, Shein would be able to publicly file its intention to float on the London stock exchange. This would then trigger a four-week process of book building and price guidance before the company’s shares are admitted to trading.

If Shein decides to proceed with the UK listing, it may also have to navigate the political landscape, as a new government could be in place. Opinion polls suggest that Keir Starmer’s Labour Party is poised to win the upcoming July 4 election in Britain, potentially ending the 14-year rule of the Conservatives.

The Labour Party has shown support for Shein’s potential London listing, which could be a positive development for the UK market that has seen several high-profile companies opt for other venues. Despite this support, some senior lawmakers have raised concerns about Shein’s labor practices, supply chain, and use of import tax exemptions. These issues have led to calls for more rigorous scrutiny.

In response, Shein has emphasised its efforts to strengthen governance and compliance across its supply chain. The company asserts that the duty-free treatment of low-value parcels is not critical to its success.

Shein’s shift to London marks a departure from its long-standing plan to list in the U.S., a plan that has encountered various obstacles both domestically and internationally. Last November, Shein confidentially filed for an IPO with the U.S. Securities and Exchange Commission and simultaneously sought approval from the CSRC. Earlier this year, however, the CSRC indicated that it would not recommend a U.S. IPO due to Shein’s supply chain issues.

The challenges Shein faces are not unique. Last week, Italian luxury sneaker maker Golden Goose postponed its IPO on the Milan bourse due to market volatility caused by political uncertainty. This situation underscores the complex environment for new listings in Europe, where companies must navigate a myriad of regulatory and market challenges to succeed.

(Source: Reuters)

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