London seeks IPOs desperately; could Shein put an end to the shortage?
Chinese clothing retailer, Shein, is planning to submit a prospectus to the United Kingdom's Financial Conduct Authority for approval, eyeing a potential Initial Public Offering (IPO) that could value it at around £50 billion ($64 billion). This news comes from anonymous sources in London's financial district. The company is said to be aiming to raise over £1 billion ($1.3 billion) from the sale of new shares if it proceeds with the IPO.
Both Bloomberg and the Financial Times reported that Shein is working on a confidential filing for a London listing. However, a representative for Shein declined to comment on the rumors.
The UK's Labour Party, which is tipped to win the upcoming general election in November, has met with various companies, including Shein, to explore investment and listings in the country. A spokesperson for the Labour Party told CNN, "Raising investment, productivity, and growth is one of our government missions. 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."
Shein, based in Singapore, had initially intended to debut in New York but has faced resistance from US regulators over potential implications for national security. Republican Senator Marco Rubio urged officials to decline any potential IPO by Shein in the US if they did not provide "extraordinary disclosures" about its ties to the Chinese government.
Susannah Streeter, a financial expert from Hargreaves Lansdown, remarked in a note, "While New York still holds enormous appeal and was the company's first choice, plans for a listing there look unlikely given the lack of a warm reception from regulators."
However, UK investors could have reservations about Shein's business model, such as a lack of transparency in its supply chain and the large amounts of low-cost clothing it produces.
A boon for London?
If Shein goes public in London, it would be a significant win for the British financial hub that has seen several companies depart for other cities or NYC in recent years. British chipmaker, Arm (ARM), for example, had the largest IPO of 2023 when it listed on New York's Nasdaq in September.
The prospect of Shein IPOing in London has rekindled fears of London's decline. Earlier this year, Wael Sawan, CEO of Shell (SHEL), sparked concerns when he suggested in an interview with Bloomberg that the company might consider a shift to the US for a higher stock valuation. Though Sawan tried to calm the speculation during an analyst call, the idea of leaving London was still unsettling for the city's financial sector. Shell is the second-largest constituent of London's FTSE 100 index, making up 8.2% of its market capitalization.
