Fast fashion group Shein on course to become largest London IPO

The Chinese-founded company is tipped to unveil a flotation on the London market, despite concern over its supply chains

People walk past a Shein advertisement in London. Senior politicians are thought to have been in talks with the company ahead of a possible flotation in London. Reuters
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The Chinese-founded fast-fashion group, Shein, could be set to unveil a share flotation prospectus in London as soon as this week.

Such a move could value the Singapore-based company at about £50 billion ($63.70 billion), and would come as a shot in the arm for the London Stock Exchange (LSE), after several high-profile companies either shunned IPOs or considered moving to other markets, principally in New York.

Ben Laidler, global markets strategist at eToro, said a Shein listing would be a “powerful antidote to the recent misplaced doom-mongering on the UK stock market”.

“At a rumoured £50 billion market capitalisation it would be the largest ever IPO in London and significantly larger than the current biggest, miner Glencore £36 billion and Russia’s Sberbank £33 billion, both from 2011,” he told The National.

“This size could easily make it large enough for the benchmark FTSE 100 index, at around the 15th-largest market capitalisation, sandwiched between Rolls-Royce and BAE.”

Sky News claimed on Monday that Shein, which owns the British fashion label Missguided, is preparing to file a share float prospectus with the UK Financial Conduct Authority as soon as this week.

The FCA and Shein made no comment.

Filing a prospectus is the first step in a possible IPO. While it does not guarantee that Shein will join the London Stock Exchange, analysts said it would show the company is serious about listing in the UK.

Dan Coatsworth, investment analyst at AJ Bell, said the “mere presence on the London market could encourage others to look hard at the UK as a listing venue”.

“Shein is now a household name in many parts of the world and that’s what many investors love to see when picking stocks.

“They want to find companies that everyone is talking about – just ask any teenager or young adult where they buy clothes and Shein is likely to be near the top of the list due to its attractive prices,” he added.

But recent attempts by Shein to list in New York have run into regulatory issues and some political opposition from the likes of Marco Rubio, a Republican senator from Florida who claims the company used cotton from forced labour in China’s Xinjiang region.

Such concerns over Shein's supply chain have been raised in London as well and it is thought that some senior politicians feel any moves towards a possible listing, including the filing of a prospectus, should not happen until after the UK general election on 4 July.

Susannah Streeter from Hargreaves Lansdown told The National it is highly likely the company would “wait until political waters have settled before any IPO, given the uncertainty the general election campaign has generated”.

Nonetheless, The Times newspaper reported on Monday that senior figures in the opposition Labour party, including Jonathan Reynolds, the shadow business secretary and Sarah Jones, the shadow minister for industry, have met Donald Tang, the chairman of Shein.

A party official confirmed that “Labour has met a range of companies including Shein, that are looking to invest or list in Britain.”

Mr Tang met British Chancellor Jeremy Hunt in February to discuss a possible share flotation in London, as part of a City charm offensive to persuade the fashion company to list in the UK.

'Full disclosure'

However, Alicia Kearns, a Conservative MP and chairwoman of parliament's Foreign Affairs Committee, voiced her opposition to Shein listing in London.

“With Shein's prices so low, the London Stock Exchange needs to ask itself: 'Whose suffering is subsiding those prices?' A company which has failed to make full disclosures about its supply chains as required by UK law, and where there are grave concerns about its factory working conditions, has no place in London,” she told The Guardian newspaper.

Meanwhile, Sarah Champion from the opposition Labour party believes there are concerns about the company's labour practices.

“No company using modern slavery should be listed in London. Unless the allegations around Shein are addressed, we should not support their application,” she said.

A representative for Shein said: “Our regular supplier audits are showing a consistent improvement in performance and compliance by our supplier partners. This includes improvements in ensuring that workers are compensated fairly for what they do.”

Founded in Nanjing in China in 2012, Shein, which was originally called ZZKKO, was the world largest fashion retailer in 2022 and, at one point, was valued more than H&M and Zara's parent company Inditex combined.

It operates in more than 150 countries and has 150 million users globally.

Updated: June 04, 2024, 6:20 AM