There is gathering excitement about the plans of Asian fashion giant Shein’s IPO, as the company seeks regulatory approval from authorities in China ahead of a projected listing in either New York or London. Shein last week said it had doubled its profits to more than USD 2bn. This makes the company look more profitable than other big names in the space, like H&M and Zara.
If it goes ahead, the Shein IPO will probably be one of the biggest of the year. In a recent financing round, Shein was valued at more than USD 60bn. Much will depend on the posture of China’s regulatory authorities, especially the China Securities Regulatory Commission, and whether they will give their blessing to a multi-billion dollar listing on a western bourse.
Shein’s head office is now in Singapore, but the company was originally founded in Nanjing, China, and is heavily reliant on domestic sales in the Chinese market. The company is considered to be on the cutting edge of mass-market retail fashion, both in Asia and internationally. Jamie Salter, founder and CEO of Shein retail partner Authentic Brands Group, recently told CNBC that Shein’s annual revenue was ‘a lot more than $30bn’.
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Shein would need approval from US regulators for a New York listing. Some lawmakers in Washington DC are known to be concerned about Shein’s lack of transparency, and especially its close relationship with the Chinese government and the Chinese Communist Party. If the US listing starts to look pr0blematic, there is a possibility that Shein will look at London as an alternative.
Chinese companies are also known to be less enthusiastic about listing in Hong Kong at the moment due to a deep market downturn there. At least one high profile IPO destined for Hong Kong – Cainiao, the logistics arm of Alibaba – has been pulled because of poor market sentiment.
Will Shein look to London for its primary listing?
Donald Tang, executive chairman of Shein, is known to have met with UK chancellor Jeremy Hunt recently as Shein explores alternatives to Wall Street. The City of London is keen to attract a mega IPO on this scale, especially after losing so much lucrative IPO business to New York and other markets over 2022-23.
London is under pressure as other companies already traded on the London Stock Exchange have been mulling a move to New York. Drug maker Indivior has been polling its shareholders over a possible plan to move its listing to the US. Travel stock TUI has confirmed that it will be seeking a primary listing in Frankfurt due to poor liquidity conditions in London.
Shein will also have one eye on the strong possibility of Donald Trump entering the White House next year. Trump has already established a reputation for himself of being unfriendly to Chinese businesses. A London listing would help Shein to insulate itself from any political fall-out from a second Trump presidency.
Shein also has to navigate a regulatory and ethical minefield, having been criticised for a lack of transparency in terms of both its tax and ownership set up, and also taking fire from US lawmakers about some of the import tax loopholes it is currently using to bring products into the US.
