Amid US obstacles to listing Shein intensifies London IPO preparations, according to sources.

Published: May 13, 2024
Author: Fashion Value Chain

According to two people with knowledge of the situation, fast-fashion behemoth Shein is intensifying plans for a London listing after encountering regulatory obstacles and resistance from US politicians during its effort to go public in New York.

One of them stated that the online fashion retailer intends to file with the London Stock Exchange (LSE) and notify China’s securities authority about the change in the venue for the initial public offering (IPO) as soon as this month. The source and another person with knowledge of the situation stated that Shein, which one source claims was valued at $66 billion in fundraising last year, began corresponding early this year with the teams of its financial and legal consultants stationed in London.

Before the anticipated float, the China-based fashion brand has also requested first talks with fund managers located in London, according to a second person with firsthand knowledge of the situation. The LSE declined to respond, as did Shein. Requests for comments from the CSRC were not answered.

According to reports, Shein approached the China Securities Regulatory Commission (CSRC) in November to request Beijing’s approval after filing in confidence for an initial public offering (IPO) with the U.S. Securities and Exchange Commission.

Although the Singapore-based firm is still formally considering a U.S. initial public offering (IPO), it has been facing difficulties in clearing regulatory obstacles in China and the U.S. due to accusations of labor abuses by U.S. politicians and litigation from rival companies. According to a different source, Shein was notified by the CSRC early this year that the regulator would not advise a U.S. IPO

According to the second source, Shein is now preparing for a London IPO, but it still wants to list in New York and intends to maintain its SEC filing in case U.S. regulators change their minds. The second source stated that after its London IPO if it thinks the U.S. political environment is more favorable, it may also pursue a secondary U.S. listing in New York.

In February, Republican Senator Marco Rubio requested that Shein’s application to list publicly in New York be denied by the SEC unless the online retailer provided more information about its business practices and “the serious risks of doing business” in China. In an election year, American authorities have been more scrutinizing the firm than they had anticipated. The two individuals claimed that the SEC had not yet advanced Shein’s IPO file, a sign of the delicate nature of the application procedure.

According to the first and second sources, Shein’s proposal to inform the Chinese regulator of the London IPO would require Beijing’s consent per the new listing requirements for Chinese companies going public abroad. If the IPO goes through, it may be among the biggest in the world this year, according to sources.

Following the decision by businesses like British chip designer Arm to list in New York to access larger liquidity pools, this might signal a turning point for London. Out of over thirty IPOs in Europe so far this year, just four have occurred in the United Kingdom.

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