Saturday, May 25, 2024

Jeremy Hunt woos Chinese fast fashion firm Shein to list on the LSE

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The Chinese fast-fashion group Shein is considering launching on the London Stock Exchange(LSE) after facing hurdles to listing in New York, it is reported.

Shein, founded in China but now headquartered in Singapore, is exploring offering its shares via London after concluding US regulators are likely to reject its bid to sell shares there.

Jeremy Hunt has already reportedly held ‘productive’ talks with the boss of Shein in a bid to persuade the company to commit to what would be one of London’s biggest-ever corporate flotations, according to Sky News.

The New York listing gave the company an expected valuation of $80bn to $90bn (£63bn-£70bn). By comparison, a total of $1bn was raised by IPOs last year.

Shein executives have also met executives from the LSE as well as junior ministers as part of its IPO preparations.

London has emerged as a frontrunner among a list of possible alternative stock markets, including Hong Kong and Singapore, according to reports.

A London float would be a major boost to the London Stock Exchange after a lacklustre period. A total of 23 firms floated on the Exchange’s two markets last year – down 49 per cent from the 45 registered in 2022, according to a recent report.

Its reputation suffered when UK-based chip designer Arm Holdings spurned a London listing for New York last year, despite strong lobbying from the government, including Prime Minister Rishi Sunak. A series of companies have also said they intend to move from London to New York, or in travel group TUI’s case to Frankfurt in Germany.

Shein has been preparing to launch its shares in New York for at least four years but the pandemic, deteriorating relations between Washington and Beijing and difficult trading conditions since Russia’s invasion of Ukraine have seen it delayed several times.

Shein’s latest attempt at a New York debut is facing new barriers. Republican Senator Marco Rubio is among those asking the SEC to block its listing, saying the company needs to disclose more about its operations in China. 

In a letter to the US regulatory Securities and Exchange Commission he called for ‘enhance disclosures’ from the company as a condition of approving its IPO, and to block it the IPO, if necessary, to protect US investors.

“Shein’s collaboration with Chinese regulators raises serious doubts that its IPO filings are complete and accurate. Those very regulators order Chinese companies to deceive US authorities and investors about the risks of doing business in the PRC,” he claimed.

Last year some US politicians called for it to be investigated over claims that Uighur forced labour is used to make some of the clothes it sells – claims Shein has strongly denied. Like other clothing firms it has also faced allegations of poor working conditions where workers for some of its suppliers were working excessive overtime with some allegedly working 75-hour weeks.

The company has sought to distance itself from its Chinese origins and has sought to diversify its supply chains. It is also moving to take on US ecommerce group Amazon by moving on from selling just its own branded clothing to becoming a platform where other merchants can sell everything directly to consumers.

Analysts say switching to London or another destination in Europe, where rivals like Sweden’s H&M and Zara-owner Inditex trade, makes sense. Europe is also one of Shein’s largest markets.

Asia’s financial hubs will roll out the red carpet for Shein. Singapore boasts the region’s most international major bourse with around four in ten listed companies coming from elsewhere. Hong Kong also has enormous fundraising capabilities.

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