SHEIN Scopes Out London IPO After US Pushback to Listing

Online retailer SHEIN is scoping out the option of moving its initial public offering to London instead of New York due to challenges related to the listing in the U.S., according to Bloomberg.

The fast-fashion firm was founded in China, but it is now headquartered in Singapore and is in the initial stages of considering London as a base as well. This is because it has “judged it unlikely that the US Securities and Exchange Commission will approve its IPO,” people familiar with the matter told Bloomberg, asking not to be identified.

The company will still go ahead with its application to list in the U.S., which is its preferred location. However, it would need to file a new overseas listing application with Chinese regulators if it chose to move to London or anywhere else in the world. SHEIN may also look into locations such as Hong Kong and Singapore.

A London listing could give a significant boost to the struggling market, following one of its most challenging years for IPOs in recent history. According to data collated by Bloomberg, approximately $1 billion was raised in the U.K. through IPOs last year, which is the lowest level in decades.

The U.K.’s economy is in the midst of challenging times as many firms leave to go to the U.S. and other countries around the world.

Ke Yan, head of research at DZT Research in Singapore, said, “Listing on the LSE is a short-term compromise taken by SHEIN to prioritize certainty over valuation and liquidity.” When Yan was asked if SHEIN’s possible shift might encourage Chinese companies to list in London, he said, “Short answer is ‘No.’” He explained that this is due to the market being much smaller than the U.S., as well as exchanges in Hong Kong and China.

SHEIN has been at the center of scrutiny from the U.S., 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.” A member of the U.S. Congress requested an examination of SHEIN’s cotton supply from Xinjiang last year. Trade tensions between the U.S. and China have in general been stirring for years.

Gary Ng, a senior economist for Natixis in Hong Kong, said, “Firms closely linked to China will find it more challenging to comply with U.S. requirements regarding transparency and how to satisfy Chinese regulators simultaneously.” Ng added, “There will be more trials to find alternatives, and the SHEIN case can serve as a case to test water. If Hong Kong’s sentiment improves eventually, it may still be the best and easiest choice.”