The London Stock Exchange is a secondary option for Shein.
Discount clothing brand Shein is considering a switch in its IPO plans from New York to London. This change comes after the United States Securities and Exchange Commission (SEC) raised objections to the original plans. The London Stock Exchange may attract Shein as a major player, but its presence there would still be perceived as a second-best option.
Shein, a Chinese fast-fashion retailer, could submit its confidential documents to the regulator as early as next week, according to Sky News. The company aims for a valuation of £50 billion (approximately €58.7 billion). Reuters reports that Shein was unreachable for comment.
Shein opted for a London listing instead of New York due to SEC concerns, according to Reuters. The company's valuation was previously €61 billion, as reported by Reuters in mid-May.
The LSE hopes to secure a high-profile listing from Shein, as the exchange has recently faced several cancellations. ARM, a chipmaker from Cambridge, chose the New York Stock Exchange (NYSE) for its IPO, while CRH, an Irish construction company, moved its listing from London to the NYSE. TUI, a travel company, went with Frankfurt over London.
LSE would benefit from a Shein listing, but it would still be seen as a backup option. Susannah Streeter, an analyst at broker Hargreaves Lansdown, estimates that Shein was valued at around $100 billion a year ago and now stands at around $90 billion.
IPOs can be a boon for investment banks, lawyers, and communications agencies, but they're often a poor investment for individual investors. In Germany, for instance, many IPOs have underperformed since listing. Around a third of companies have lost more than half their value. However, there have also been winners. Shein reportedly planned a confidential IPO in the US by the end of 2023. The China-based and now Singapore-based company is said to use forced labor in the production of its clothing.
The company also faces criticism for sending goods directly from China to foreign customers, allowing them to avoid import duties. Transparency concerning business data is limited. Shein's 2022 revenue is estimated to be around $23 billion. In Germany, Shein has spent heavily on lobbying in the parliament, says research from Capital.
Streeter predicts that any regulatory attempts to block Shein's New York stock market listing due to its China-based connections are likely. She also warns of potential ethical concerns as the company has received criticism for producing cheap clothing, lack of transparency in the supply chain, and plagiarism of other designers' works. Investors prioritizing ESG (Environmental, Social, and Governance) may be hesitant to invest in Shein if it goes public in London. Additionally, Bank of America advises caution regarding Shein's low-price strategy: "The low-priced strategy attracts price hunters, but also puts pressure on the margins of sellers on these platforms."
The original article appeared on Capital.de
The article was first published on Capital.de.
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Shein's decision to pursue an Initial public offering (IPO) in London, instead of New York, is partly due to concerns raised by the SEC. The London Stock Exchange (LSE) may gain a major player in the textile industry with Shein's listing, but it might still be perceived as a secondary option compared to a New York listing.
