A Shein IPO appears to be on its way to London, after weeks of speculation.
The online fashion giant - a favourite among Gen-Z consumers - had been lining up a float in New York. But its strong China links looked set to land it in a similar regulatory quagmire to social media platform TikTok, which could yet be banned in the US.
It's meant that a blockbuster London Stock Exchange listing has been on the cards for several weeks. This was all but confirmed on 2 June when Sky News revealed Shein was preparing to file a prospectus with the Financial Conduct Authority (FCA).
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FCA approval would be one of the last stages the retail platform would have to go through to be able to float in London. So, when could this IPO take place - and what else do we know about the offering?
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When could a UK Shein IPO take place?
At the moment, nothing is confirmed for when Shein’s UK IPO will take place. Despite being in the process of filing its prospectus with the FCA, this does not mean it’s pushing for a particular deadline, or that it has to list in London at all.
At present, a late-summer or autumn float is reportedly a possibility. MoneyWeek will bring you more as soon as the information becomes available.
What else do we know about the UK Shein IPO?
According to Sky’s reporting, the London Stock Exchange floatation Shein is seeking would value the company at around £50bn. The huge sums involved could make it the biggest IPO ever to take place in London, with the current record held by the 2011 valuation of trading and mining giant Glencore International (£36.34bn).
We also know that the company has been wooing the UK political establishment. Conservative Chancellor of the Exchequer Jeremy Hunt reportedly met with its executive chair Donald Tang in February, with Tang reportedly having also been in communication with Labour’s frontbench, including shadow Business Secretary Jonathan Reynolds.
Attracting the firm to London would be seen as a big vote of confidence in London amid a challenging period for the UK’s capital. Ben Laidler, global markets strategist at investment platform eToro, said such a move would be a "powerful antidote to the recent misplaced doom-mongering" about UK stock markets.
He said: “The market is already coming in from the cold as the economy firms, interest rate cuts appear on the horizon, July’s election is set to give political clarity, and valuations are attractive. A Shein IPO could be the icing on the cake of this recovery.
"At a rumoured £50 billion market capitalisation it would be the largest ever IPO in London, and significantly larger than the current biggest, miner Glencore and Russia’s Sberbank (£33 billion). This size could easily make it large enough for the benchmark FTSE 100 index, at around the 15th largest market capitalisation, sandwiched between Rolls Royce and BAE.”
Why is Shein controversial?
There are two main reasons why a Shein float would not be without controversy. For starters, despite nominally being headquartered in Singapore, the company is highly exposed to China. Indeed, it was founded there in 2008.
Politically, there is concern that the country’s tilt towards authoritarianism and expansionism in recent years could lead to a trade war, if not a full-scale military conflict, with the west. A lack of trust in Beijing’s motivations has led to significant political debate over whether the UK should view China as a threat to its interests. The challenge this presents to western investors is whether this animosity could make Chinese - or heavily China-linked - investments risky.
Secondly, Shein faces the type of challenges we've perhaps come to expect from fast fashion retailers. It has had to bat away allegations about poor worker rights and copyright breaches, amongst several other serious claims. It says it’s investing “tens of millions of dollars” into “strengthening governance and compliance” in its supply chain. It also insists on its website that it “respects and protects intellectual property (IP) rights”.
