'Chinese Fashion Giant' Shein Considers London Stock Exchange IPO Instead of the US

Chinese fast fashion company Shein, which has been pursuing a listing on the New York Stock Exchange, is turning its attention to London. This is due to the assessment that it will be difficult to obtain approval from authorities amid US-China tensions.

[Image source=Reuters Yonhap News]

Bloomberg reported on the 27th, citing sources, that Shein, a Chinese fashion company headquartered in Singapore, has begun considering a London listing after concluding that the US Securities and Exchange Commission (SEC) is unlikely to approve its initial public offering (IPO). A source said, "We still prefer a US listing the most, and the consideration of a London listing is at an early stage," adding, "Besides London, Hong Kong and Singapore are also being considered."

Known as the "Chinese Uniqlo," Shein rapidly grew during the pandemic by targeting customers sensitive to social media trends, offering about 6,000 items daily at prices cheaper than competitors. After applying for an IPO with US authorities in November last year, it has been mentioned as a major IPO candidate this year.

However, as US-China relations show little improvement, and with concerns raised in the US Congress about possible links to the Communist Party, many have assessed that debuting on the New York Stock Exchange will not be easy. Senator Marco Rubio has even conveyed to the SEC that Shein’s listing should be blocked. In US political circles, there are also allegations that Shein used cotton produced through forced labor in Xinjiang, China, to maintain its ultra-low prices.

Shein initially expected a corporate valuation of $80 billion to $90 billion through a New York listing, but in a private transaction at the end of last year, its valuation was much lower, around $50 billion. The report also suggested that if Shein pursues a listing in London or other regions, it will need to submit a new overseas listing application to Chinese regulatory authorities, which could delay the IPO.

However, this could be a positive development for the London Stock Exchange. Once considered a major market, the UK financial market had its worst year last year, with IPO fundraising totaling about $1 billion, the lowest in decades. The UK is also striving to prevent companies from leaving for the US and other countries. Semiconductor design company ARM, headquartered in Cambridge, UK, went public in New York last year instead of London despite government efforts to persuade it otherwise.