Chinese online retail rising star Shein might consider a London stock market listing after judging that a listing in New York might not be the best option.
The e-commerce group is looking at the LSE for an IPO after concluding that a US application is not likely to be accepted by the SEC, according to a report by Bloomberg.
London is now seen as a frontrunner, as well as Hong Kong or Singapore, with the Chinese company said to have held talks with senior figures at the LSE late last year.
It is now said to be in the early stages of preparing for a possible float in London.
“Having one of the most disruptive names in retail float in the UK would certainly do wonders to help fix the London Stock Exchange’s damaged reputation as a listing venue,” said analyst Danni Hewson at AJ Bell.
“Investor interest could be huge, which bodes well for attracting other names to list in the UK after a patchy spell that has seen a growing number of big stocks turn to the US as their main stock location.
“Shein wants to be seen as a global business and having a Western stock listing rather than one in China would position it differently in the eyes of investors. It would imply greater stock liquidity and higher levels of transparency and corporate governance.”
As well as avoiding potential geopolitical clashes involved in a US listing, with relationships remaining sour between the US and China, more relaxed regulation could also be a factor, with December’s proposed streamlining of the London Stock Exchange listing regime that aims to make IPOs in the UK more attractive to companies.
Shein would face plenty of headwinds if it chooses to list in the UK, Hewson said.
“A public listing will put a spotlight on its supply chain and the ethical and environmental issues that surround fast fashion generally. The clothing retailer has come under pressure from lawmakers to prove it does not use forced labour in the manufacture of its products. It has also been accused of copyright infringement, which presents another risk to investors.”
These issues will not matter to all investors, she said, with some simply viewing Shein as a new opportunity to buy shares in a fast-growing name in retail.
London listing rules
The UK tweaked listing rules in 2021 to help attract tech company flotations as part of a wider set of reforms to keep London a globally competitive financial centre after Brexit.
Then, with a severe death of floats in the past two years, with the final quarter of last year the worst since the start of 2009 as not a single IPO was completed in the fourth quarter (apart from one Aquis transfer and some reverse takeovers), further changes to listing rules were proposed.
Under the new streamlining measures from the Financial Conduct Authority, there will no longer be a distinction between London’s premium and standard listing segments, with no more requirement for shareholders to approve some large transactions or those with related parties.
So far in 2024, there has been one major flotation, of Air Astana, which started trading earlier this month.
