HONG KONG - Fast-fashion company Shein is considering the possibility of switching its initial public offering (IPO) to London from New York because of hurdles to listing in the United States, according to people with knowledge of the matter.
Shein, which was founded in China and is now headquartered in Singapore, is in the early stages of exploring the London option as it has judged it unlikely that the US Securities and Exchange Commission (SEC) will approve its IPO, the people said, asking not to be identified.
Shein is still working on its application to list in the US as its preferred location, the people said. It would need to file a new overseas listing application with Chinese regulators if it decided to switch to London or elsewhere, they added. Other venues, including Hong Kong or Singapore, may also be considered, two of the people said.
A representative of Shein declined to comment.
A listing in London would be a potential boon to the beleaguered British market, after one of the worst years for IPOs in its modern history. About US$1 billion (S$1.35 billion) was raised in Britain via IPOs in 2023, the lowest level in decades, according to data compiled by Bloomberg.
Britain is also struggling to stem an exodus of firms to the US and elsewhere. Chip designer Arm Holdings spurned London for a New York IPO in 2023, even after the British government lobbied for a domestic listing by the company, which is based in Cambridge, England.
Already-listed companies are migrating abroad, with travel operator TUI’s shareholders voting earlier in February to delist from the London Stock Exchange (LSE) and move trading primarily to Germany.
“Listing on the LSE is a short-term compromise taken by Shein to prioritise certainty over valuation and liquidity,” said Mr Ke Yan, head of research at DZT Research in Singapore. Asked if Shein’s possible shift might encourage Chinese firms to list in London, he said “the short answer is no”, given that the market is much smaller than the US, as well as compared with the exchanges in Hong Kong and China.
Small and rare
US IPOs by Chinese companies have mostly been small and rare in the years since Didi Global was forced off the boards in New York, part of a crackdown that essentially closed the market to first-time share sales by Chinese firms.
Amer Sports’ US$1.6 billion offering in February was the biggest China-backed IPO to tap the US market since Didi raised US$4.4 billion in 2021, and the first to raise more than US$200 million in that time.
Shein has been subject to scrutiny from the US, with Senator Marco Rubio among those asking the SEC to block its listing, saying the company needs to disclose more about its operations in China.
In 2023, a member of the US Congress asked for a probe into Shein’s cotton supply from Xinjiang. US-China trade tensions have been simmering for years.
“Firms closely linked to China will find it more challenging to comply with US requirements regarding transparency and how to satisfy Chinese regulators simultaneously,” said Mr Gary Ng, a senior economist for Natixis in Hong Kong.
“There will be more trials to find alternatives and the Shein case can serve as a case to test the waters,” he said. “If Hong Kong’s sentiment improves eventually, it may still be the best and easiest choice.”
A pioneer of ultra-fast fashion with items such as shirts and swimsuits for as little as US$2, Shein in 2023 filed for a US IPO aiming for a valuation of US$80 billion to US$90 billion, people familiar with the matter said at the time.
Private trades in late 2023 valued the company much lower, at about US$50 billion. BLOOMBERG
