Recently, the Financial Times, citing five informed sources, reported that fast fashion e-commerce giant Shein has a backup plan—seeking to list in Hong Kong, China, due to increasing obstacles in both China and the UK for its London IPO (initial public offering).
Despite the potential for a market valuation of £50 billion from a London listing, which would act as a “catalyst” for the UK capital market, Shein faces resistance from aggressive social activists in the UK. Some fund managers have warned that a London listing for Shein might “struggle” to gain investor support.
In June of this year, Reuters cited two anonymous sources saying that Shein had submitted non-public documents to the FCA (Financial Conduct Authority) in early June to initiate the listing process on the London Stock Exchange, with the IPO expected later this year. Shein also officially notified the CSRC (China Securities Regulatory Commission) of its change of listing location, pending approval.
Upon obtaining approval from both the FCA and the CSRC, Shein will be able to publicly announce its intention to list on the London Stock Exchange. This will kick off a typically four-week IPO process involving book-building with investors and price range determination, after which its stock can be officially listed and traded.
According to informed sources, Shein has not yet received CSRC approval. The company also needs to obtain approval from other relevant departments reviewing its offshore business model, and it is unclear if this approval is forthcoming.
Sources said that under pressure from investors and amid growing concerns over the slowing explosive growth in its main market, company founder Sky Xu is pushing hard to complete the IPO by the end of the year.
“This company, founded in Nanjing, China, and now headquartered in Singapore, still retains the option of listing in Hong Kong,” one source said, noting that Shein’s listing plans remain fluid. Even though the company currently focuses on a London listing, it cannot be confirmed whether it will ultimately list there.
Although Hong Kong is a backup option, sources revealed that Sky Xu is not keen on it, viewing it as “admitting defeat.”
Insiders also revealed that Shein might seek a dual listing in Hong Kong and London. One source mentioned that due to difficulties with U.S. regulators, the company has largely abandoned plans to list in New York.
In November 2023, it was first reported that Shein would list in the U.S., submitting a non-public IPO application to U.S. regulators and seeking CSRC approval the same month.
Shein has been under strict scrutiny in the U.S., with Senator Marco Rubio urging the SEC to block its listing, saying the company needs to disclose more about its operations in China. Additionally, earlier this year, the CSRC advised Shein not to pursue a U.S. IPO due to supply chain issues.
In February 2024, it was reported that Shein considered shifting its IPO from New York to London due to obstacles in the U.S.
The Financial Times cited a former senior Shein employee saying, “Overseas plus Hong Kong listing would be the perfect choice: it would maintain Shein’s connection with China in terms of business and user base while establishing a global company image.”
Founded in Nanjing by Chinese entrepreneur Sky Xu in 2008 and now headquartered in Singapore, Shein has grown into one of the world’s largest fashion e-commerce companies, with products sold in over 150 countries.
Shein, a pioneer in “ultra-fast fashion,” is known for selling a variety of trendy fashion items at prices as low as $2 each. During the pandemic, Shein’s direct-to-consumer e-commerce sales soared in the U.S., quickly becoming one of the most downloaded shopping apps, targeting teens and young women. In the U.S. fast fashion market, Shein’s sales have already surpassed H&M and Zara. In 2022, Shein opened distribution centers in the U.S., Canada, and Europe to speed up shipments in these markets and began expanding production in Brazil, Turkey, and India.
Shein has consistently worked to expand its business scope and diversify its private label offerings beyond clothing and accessories. In August 2023, Shein acquired about one-third of SPARC Group’s shares, forming a joint venture to own American fashion retailer Forever 21 and sell its products through Shein’s online channels. In October 2023, Shein acquired the British internet fashion brand Missguided from Frasers Group Plc, further expanding its range of third-party products.
Bloomberg sources revealed that Shein’s net profit for 2023 is expected to reach $2.5 billion, a significant leap from $137 million in 2019. Additionally, the Financial Times noted that Shein hopes to increase its sales to $58.5 billion by 2025.
When Shein applied for a U.S. IPO last year, its target valuation was $80 billion to $90 billion. However, in a financing round in May 2023, Shein’s valuation was about $66 billion, down by about one-third from its nearly $100 billion valuation in April 2022. A private trade at the end of 2023 valued Shein even lower, at about $50 billion. This suggests that market valuations for Shein are becoming increasingly conservative.
*Note: Private trades refer to stock transactions conducted before a company’s shares are publicly listed or outside public markets, typically between investors rather than through public stock exchanges.
｜Source: Financial Times, Reuters, Bloomberg, Luxe.CO historical articles
｜Image Credit: Shein official website
｜Editor: LeZhi
