Shein and Rasperberry Pi IPOs could drive new wave of London floats, analyst says

By Louis Goss

A series of recent successes on the London Stock Exchange could see both fast-fashion retailer Shein and computer maker Raspberry Pi confirm plans to float on the market within a matter of days, in what could mark a major turning point for the U.K.'s troubled bourse, an analyst said.

The two floats could spark a revival of London's troubled stock market, which has suffered from a dearth of initial public offerings and a series of delistings, driven by companies seeking out higher valuations in Europe and the U.S., AJ Bell analyst Dan Coatsworth said.

He explained that the recent rally in the FTSE 100 UK:UKX, which has seen the index achieve gains of 9% in 2024, alongside a series of successful IPOs that have seen the average stock floated in London this year increase by 40%, has paved the way for a possible revival.

Public floats by Shein and Raspberry Pi could, in turn, restore confidence in the U.K.'s main stock exchange and encourage other companies to start looking at London's markets in order to "take advantage of the new-found oomph in U.K. equities," Coatsworth said.

"Improved sentiment towards the UK market raises the chances of more companies listing on the London Stock Exchange," Coatsworth said. "Shein is such a big name in the world of retail that its mere presence on the London market could encourage others to look hard at the UK as a listing venue."

Having initially filed for a New York IPO in November 2023, Sino-Singaporean clothes seller Shein -- a Gen Z favorite which is known for selling bikinis for as little as $2 each -- has increasingly looked to float London in order to avoid heightened scrutiny in the U.S.

In February, U.S. Senator Marco Rubio called on Shein's IPO to be blocked in America, until the company made "enhanced disclosures," following calls for the company to be probed by the U.S, Securities and Exchange Commission over possible use of underpaid labor in Xinjiang.

On Monday, Shein started stepping up its preparations for a London listing, in line with plans to file with the London Stock Exchange as soon as this month, according to Reuters, who cited two people familiar with the matter.

The Singapore-headquartered company, which was valued at $66 billion at a fundraising event earlier this year, has already started engaging with advisors and London based fund managers in readying itself for a London float.

Hosting Shein's IPO could, however, come with its own liabilities for the London Stock Exchange, including the risk that "the U.K. develops a reputation for admitting companies with more questionable qualities," Coatsland said.

Cambridge, U.K.-headquartered Raspberry Pi - which makes small, low-cost, beginner-friendly coding computers - could also help boost the London Stock Exchange's attractiveness to technology companies, which are otherwise "woefully underrepresented" on the bourse.

"Raspberry Pi will be a much smaller float," Coatsland said. "However, its listing would still be significant as it brings a well-known name in the technology sector to the UK market - something of a rarity and hopefully the start of things to come."

   Stock                      Share price performance since IPO 
   MicroSalt                  113% 
   Helix Exploration          85% 
   European Green Transition  53% 
   Fuel Ventures VCT          0% 
   Praetura Growth VCT        -1% 
   Air Astana                 -10% 
   Average                    40% 

Just six companies have floated in the U.K. in 2024 so far. Those six stocks have achieved average gains of 40%, with the most successful being that of MicroSalt - a company which makes low-sodium alternatives to salt - which has seen share price increase 113%.

Both companies may now be seeking to take advantage of this recent "strong run" by pushing ahead with IPOs in the "short window" before the lull in corporate activity that happens during the summer and ahead of the U.K.'s upcoming elections, which must be held no later than December.

-Louis Goss

This content was created by MarketWatch, which is operated by Dow Jones & Co. MarketWatch is published independently from Dow Jones Newswires and The Wall Street Journal.

(END) Dow Jones Newswires

05-14-24 0918ET

Copyright (c) 2024 Dow Jones & Company, Inc.