Shein, the Singapore-based fast-fashion retailer, a favourite of teenage girls, has been sounding out the market on a possible listing in London in the New Year.
The news has come as a bit of a surprise for London, as Donald Tang, Shein’s chairman had previously put on record that the company was seeking a listing on the US’ NYSE, and it seems that negotiations are ongoing with the SEC in America.
However, on a stopover on the way back to Asia, Tang was reported to have been seen in the environs of Paternoster Square, home of the London Stock Exchange, and various media outlets are reporting that the company, originally founded in Nanjing, China had opened negotiations with the LSE over a possible primary listing.
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This is a blow for New York, given that the market was saying that a Shein listing on the NYSE would have been one of the biggest in the last ten years. Conversely, the LSE has been experiencing mean times post-Brexit. According to data from the UK’s Financial Conduct Authority, the number of requests to float on the main market of the LSE dipped to its lowest level in at least six years with only 56 companies applying to list their shares on the LSE’s main market between January and November in 2023.
Where London loses, New York gains
And where London falters, New York benefits, hoovering up companies switching between the markets with Footsie stalwarts including travel agent, TUI [LSE:TUI] and construction giant, CRH LSE:CRH mooting following ARM Holdings [NASDAQ:ARM] out of the door and beating a path to Wall Street or other markets, with one well-known fund manager saying London was becoming a Jurassic Park of beasts of a bygone age.
Brexit was the catalyst, but a foundering economy, low investment, low valuations, muted trading volumes, and the LSE’s regulatory regime have all contributed to the LSE becoming the sick man of Europe and unable to hold a candle to Nasdaq or the NYSE. Shein might itself be scared off by the LSE’s ESG regulations and has had a bit of a sour relationship with HM Treasury over VAT registration, but has a footprint in the UK, sweeping in to buy troubled online retailer Missguided from Frasers Group in October.
If the LSE pulls this off, it would be striking a blow for the LSE and a beleaguered Prime Minister, Rishi Sunak, who spent the year trying and failing to extoll the virtues of the City of London. However, it’s early days and the most likely outcome will be Shein listing in New York. The company is not considering a dual-listing.
Shein: drop-ship to integrated retailer
Shein has only been around 15 years, starting off as a drop-shipper, buying items from other manufacturers and reselling though its digital platform. However, it moved into the supply chain and about a decade ago had become a fully-fledged, integrated retailer.
A year ago the company moved from China to Singapore, to give it a more international presence, but maintained most of it manufacturing and warehousing facilities in the People’s Republic. In recent years, Shein has found itself in the middle of several controversies including trademark disputes, tax evasion, human rights violations, and health and safety concerns.
Covid was good for Shein as its wholly-online business was able to keep locked down consumers in the latest fashion, and has always been an inexpensive (though slightly impermanent) fashion option. The online retailer is valued at around USD80bn, which would be a serious addition to any exchange.
Neither Shein or the LSE have confirmed discussions are taking place.
