Shein considers launching IPO in London instead of New York following U.S. scrutiny: report

By Louis Goss

Fast-fashion giant Shein is reportedly exploring plans to pivot its upcoming IPO by listing in London instead of New York, in what would come as a major boost for the U.K.'s main stock market following a departure of significant listings over the previous year.

The Sino-Singaporean company first filed for a New York IPO in November 2023, but is now considering shifting the float to London, in seeking to avoid the heightened scrutiny it has faced in the U.S. over its operations in China, sources told Bloomberg.

In February, Republican Senator Marco Rubio accused Shein of having submitted incomplete information in its IPO filing, as he called on the Securities and Exchange Commission (SEC) to block the float unless the company makes "enhanced disclosures."

Rubio's calls followed the submission of a letter from a group of 22 bipartisan members of the U.S. House of Representatives in which they called on the SEC to probe allegations that Shein uses forced and underpaid labor in Xinjiang in its supply chains.

A new listing in the U.K. would come as a boost to the London Stock Exchange which has suffered over the past year from a series of companies either leaving Britain's top bourse or instead avoiding the market entirely.

Shein, which is best known for selling ultra-cheap clothes including $2 bikinis, is reportedly aiming to achieve a valuation of $80- $90 billion, in what would become one of London's largest ever IPOs if it goes ahead with a U.K. listing.

Earlier this month, investors in former FTSE-100 company Tui (XE:TUI1) voted in favor of the German travel firm's plans to abandon its London listing and shift its primary listing to Frankfurt instead, with a view to boosting its liquidity and simplifying its ownership structure.

In August 2023, British tech giant ARM Holdings' (ARM) decision to list on the Nasdaq instead of the LSE was taken as a blow to the U.K.'s markets, following extensive efforts from Britain's government to persuade the company to have its IPO in London.

Decisions by two of Ireland's top companies - building materials seller CRH (CRH) and cardboard packaging maker Smurfit Kappa (IE:SK3) - to move their main listings to the New York Stock Exchange in 2023 were also taken as major hits to London's bourse.

The exodus has sparked fears that the LSE is now in a "doom loop" through which a lack of IPOs is causing a lack of liquidity on London's stock market, that is leading to the low valuations that are driving people away in the first place.

Shein was contacted by MarketWatch for comment.

-Louis Goss

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02-27-24 0447ET

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