Shifting IPO location to Hong Kong, Shein reconsiders New York listing
Shein, a fast-fashion retailer, seems to be abandoning plans for a London listing and instead focusing on a Hong Kong IPO, dealing another blow to the ailing London IPO market. The move comes as Chinese regulators reportedly discouraged Shein from listing in the British capital due to prolonged approval processes.
Initially, hopes were high that Shein's IPO could rejuvenate London's stock market. However, delays in approval from Chinese officials have led Shein to prioritize Hong Kong as its potential listing location, although no final decision has been announced.
Bloomberg reports that Shein's shift in focus is in response to a more welcoming environment in Hong Kong. Despite the undecided nature of the situation, suspending plans for a London IPO could mean missing out on a significant financial boost for the London Stock Exchange, which has been grappling with an exodus of companies amid waning investor interest.
Susannah Streeter, head of money and markets at Hargreaves Lansdown, suggests that controversy surrounding Shein's business practices may have played a role in Chinese regulators' reluctance to approve the London listing. The potential IPO value of around $50 billion would have made it one of London's largest listings in history.
Shein's choice of IPO location faces numerous hurdles. Among them are US-China trade tensions, which have hurt global retailers with close ties to China. Trump's tariffs have caused issues for these companies, and the current 90-day truce in the trade war offers no guarantee of a comprehensive deal.
Additionally, tax reviews on small-package shipping are ongoing in the US, EU, and the UK. These taxes could significantly impact Shein, whose bargain prices are a key competitive advantage. The negative publicity surrounding Shein's business practices, including allegations of forced labor in its supply chains, has fueled resistance to its IPO in various markets.
These challenges have contributed to a decline in Shein's estimated IPO valuation, which dropped from $66 billion following its last round of venture funding. Despite these setbacks, Shein remains a significant player in the fast-fashion market and continues to explore suitable IPO locations.
Investors may find it difficult to provide financing for Shein's IPO, given the current challenges surrounding tariffs and business practices. The potential financial boost from a London IPO, initially hoped to be significant, could now be at risk due to Shein's shift in focus to Hong Kong.
