Shein eyes Hong Kong for IPO as London listing stalls
Fast-fashion giant Shein is reportedly working towards a Hong Kong initial public offering (IPO) after failing to secure approval from Chinese regulators for its London listing.
The Singapore-headquartered company aims to file a draft prospectus with Hong Kong’s stock exchange in the next few weeks, according to Reuters.
The move comes as a blow to the London Stock Exchange, which had been courting the e-commerce behemoth in what was set to be the biggest listing of the year, raising hopes of revitalising the market after a dearth of flotations.
If successful, Shein plans to go public within the year. The fast fashion firm had planned to list in London in the first half of 2025.
But despite securing approval from the UK’s Financial Conduct Authority (FCA), it later ran into issues with the China Securities Regulatory Commission. The firm recently dropped its partnership with two London-based PR firms it had contracted with to help steer the London float, in early signs it was abandoning its plans.
The CSRC was reportedly concerned that issues with Shein’s London IPO could cause embarrassment for the Chinese government.
Susannah Streeter, head of money and markets at Hargreaves Lansdown, said it “wasn’t overly surprising” that Shein was looking at Hong Kong.
“[A] barrage of criticism, which looked set to intensify leading up to a London listing, is considered to be partly why Chinese regulators were reluctant to give the IPO the green light.
“This will be a blow for London’s ambitions to attract bigger names to list in the capital, but given the obstacles piling up, it’s not surprising that that the company seems to be veering off in another direction in its quest to raise capital for further expansion.’’
China troubles for Shein
The China-founded firm made headlines earlier this year when a representative refused to clarify whether its clothes were made using any Chinese cotton.
Shein was summoned amid concerns it is using forced labour in its supply chain and sourcing cotton from Xinjiang province in China, where the region’s Uyghur minority are being persecuted and conscripted for forced labour, human rights group say.
Uyghur rights group Stop Uyghur Genocide said it would apply for a judicial review of the IPO if it went ahead in London.
Prior to its London listing, Shein had planned to list in New York, but intense scrutiny from US lawmakers on Shein’s labour practices led to the plan being scrapped.
XTB research director Kathleen Brooks said Shein’s decision to move its planned listing might be a “blessing in disguise”.
“Apparently, the Chinese regulator insisted the listing was moved from London. This suggests that it was becoming political, which is usually problematic in the long term.
“The fact that the FTSE 100 has barely budged on this news and remains within touching distance of an all-time high, is a sign that the Shein listing was never priced into the UK market and the fact it is now listing in Hong Kong is unlikely to have an impact on the FTSE100.”