Shein looks set to abandon plans to list in London and is instead concentrating its attention on a Hong Kong listing, in a further blow to the City’s long-suffering IPO market.
Hopes that Shein’s IPO could breathe new life into London’s stock market appear to be dashed, according to reports that the lengthy approval process among Chinese regulators had dissuaded decision-makers at Shein from listing in London.
Citing people familiar with the matter, Bloomberg reports that Hong Kong has become the main focus for the fast fashion retailer, though it is understood that no final decision has yet been reached.
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“Shein’s planned London listing has been mired in so much controversy, it’s not overly surprising that the fast fashion giant might be throwing in the towel and looking set to launch in Hong Kong instead,” said Susannah Streeter, head of money and markets at Hargreaves Lansdown.
Shein’s value at IPO was at one point estimated at around $50 billion, which would make it one of the largest listings in London’s history.
Instead, the London Stock Exchange, which is facing an exodus amid lacklustre investor interest, may have to make do without this potential windfall.
What challenges is Shein facing ahead of a potential IPO?
Conditions are far from perfect for Shein as it seeks a suitable IPO location.
The tariff debacle has been bad news for global retailers, particularly those with close links to China, which has seemingly been the key target for president Trump’s most punishing tariffs.
While US-China trade relations are relatively cordial during the current 90-day roll-back of the most stringent reciprocal tariffs, a failure to reach a comprehensive trade deal could see frosty trading relationships between the two superpowers resume.
Reviews are also underway into shipping tax exemptions for small packages. Trump has reversed the tax exemptions for these and the EU looks set to phase them out, while the UK is carrying out its own review.
Given the bargain pricing that gives Shein its edge over other retailers, taxes on its imports would be a major blow to its business.
These headwinds, as well as the prospect of listing in London whose IPO market is less buoyant than those of other markets like the US, had pushed Shein’s prospective valuation at IPO down from the $66 billion it reached last time it raised venture funding.
Why would Shein’s IPO be controversial?
While the prospect of Shein’s IPO taking place in London now appears less likely, it was always facing resistance.
There had been concerns over forced labour in its supply chains, prompting Amnesty International to slam the proposed listing as “a badge of shame” for the London Stock Exchange.
Concerns over these elements of Shein’s business soured US regulators on the prospect of allowing Shein to list in the country, which had been its first choice. That prompted Shein to explore other options, with London quickly standing out as one of the most appealing locations.
However, resistance to the listing from UK consumers could have played a part in the reluctance of Chinese regulators to OK the deal.
“The barrage of criticism, which looked set to intensify leading up to a London listing, is considered to be partly why Chinese regulators were reluctant to give the IPO the green light,” says Streeter.
Shein is headquartered in Singapore, but requires the China Securities Regulatory Commission’s permission to list overseas given that most of its products are sourced from China.
