Shein’s London IPO: Repairing Damage from US Defections

blog image

 With the potential entry of online fashion giant Shein, London’s financial market could experience a significant upswing. This move not only represents a major stride for the city’s stock exchange but also serves as a counterbalance to the recent trend of corporations shifting their primary listings to New York, a trend that has posed challenges for the market.

 Some have speculated that Shein, a global online fashion retailer known for its fast fashion and low prices, may follow Raspberry Pi’s lead and consider selling shares in the UK after the company recently considered doing so. Adding gasoline to the speculative fire, Bloomberg News dropped hints that Shein would list in London. Shein, with an incredible $50 billion valuation in private transactions, might bring much-needed attention to the floundering London market, which has been overshadowed by the recent wave of European initial public offerings (IPOs).

 A favorable development in the eyes of Susannah Streeter, head of money and markets at Hargreaves Lansdown, who said, “This would be a boost for the City.” In an effort to revive the market after significant firms like CRH Plc, Ferguson Plc, and Flutter Entertainment Plc fled to the US, Chancellor of the Exchequer Jeremy Hunt is actively courting companies to list on the London exchange. This has added gasoline to the market’s confidence.

 Nevertheless, there is some controversy around Shein’s proposed listing in London. Concerns about getting the US Securities and Exchange Commission (SEC) to approve a New York IPO, due to the company’s Chinese operations, have led the corporation to consider this alternative. Senator Marco Rubio of the United States has voiced his concerns about Shein’s Chinese operations, which further complicates the regulatory challenges the corporation already confronts.

 A further stain on Shein’s image is the accusation that the company bought cotton from the Xinjiang region of China. After hearing about these activities, Virginia Representative Jennifer Wexton demanded an investigation into Shein. Regardless of these obstacles, London’s consideration by Shein is a testament to the city’s prominence as a key European equity market.

 But the City of London has failed to benefit from the recent upturn in the European IPO market. Companies such as Puig Brands SA have chosen to list elsewhere, causing its percentage of first-time share sales to sink to a meager 2% this year. Last year, London’s listing prospects took a major hit when ARM Holdings Plc chose to go public in New York. This was the city’s largest setback. The market has been struggling due to a lack of high-profile listings and increased competition from other European exchanges.

 Amidst these challenges, the London Stock Exchange Group Plc underscores that initial public offerings (IPOs) should not be viewed as the sole barometer of market health. Despite a decline in new listings, the equity capital raised in London has outpaced that of all other major European exchanges combined. The representative stresses that follow-on offers have accounted for the majority of the £7.4 billion ($9.4 billion) raised in London this year, highlighting the resilience of the market.

 The prospect of Raspberry Pi’s London flotation has Chancellor Hunt expressing his admiration for the company, echoing the sentiment that the United Kingdom remains an attractive destination for international companies. The potential for Shein’s listing to broaden the appeal of the London market, particularly among younger investors, is a viewpoint shared by Janet Mui, head of market analysis at RBC Brewin Dolphin. She believes that Shein’s arrival could inject a more youthful energy into UK stocks, potentially attracting investors who perceive the FTSE 100 and other traditional indexes as less dynamic.

Ethan Sullivan

Ethan's penchant for the pulse of the fashion world extends to covering lifestyle topics, offering readers a seamless blend of the latest style updates and lifestyle trends.

Read more