03/06/2024 – 20:58
Online retailer Shein Group is closing in on an initial public offering (IPO) in London. The company is preparing to submit a confidential prospectus for an IPO to UK regulators as early as next week, Sky News reported on Sunday evening. Shein is targeting a valuation of around 50 billion pounds sterling, according to reports, which would make it one of the biggest IPOs in the history of the London Stock Exchange.
The move suggests the company is losing hope at the prospect of a US-based offering. Shein filed confidential paperwork for an IPO with the Securities and Exchange Commission last year, but tensions between the U.S. and China derailed the listing.
Although Shein is based in Singapore, the company was founded in China and still maintains most of its business operations there. The link to China has drawn scrutiny from lawmakers, who have urged regulators to block a U.S. IPO. In May 2023, a group of lawmakers sent a letter to SEC Chairman Gary Gensler requesting that the agency force Shein to provide independent verification that it does not use forced labor from China’s minority Uighur population before approving a listing. Since then, the company and other retailers with ties to China have been the focus of several congressional inquiries into their labor, sustainability and copyright practices.
Shein said it has a “zero tolerance policy” for forced labor and requires contract manufacturers to only buy cotton from approved regions. The company has also tried to emphasize its commitment to compliance to allay concerns among investors, lawmakers and regulators.
Given that New York exchanges have higher trading volumes and a broader investor base, U.S. listings tend to command higher valuations than the same companies would have achieved through London IPOs. However, listing in London – especially for Shein – can have its benefits. Although the relationship between the United Kingdom and China has become more tense in recent years, it remains more cordial than that between Washington and Beijing. Additionally, years of slow IPO activity have left the City, London’s financial district, eager for high-profile deals, which could help pave the way for Shein.
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