Fast-fashion company Shein is considering relocating its initial public offering from New York to London due to obstacles encountered in the US listing process, according to individuals familiar with the situation.
Shein, initially founded in China but now headquartered in Singapore, is in the preliminary stages of considering the London option. The company has assessed it as improbable that the US Securities and Exchange Commission will greenlight its IPO, according to sources who requested anonymity due to the confidential nature of the information.
According to the sources, Shein is continuing to progress with its application for listing in the US, which remains its favored destination. However, if the company opts to switch to London or another location, it would necessitate submitting a fresh overseas listing application with Chinese regulators, they explained. Additionally, Hong Kong or Singapore are also being contemplated as potential alternatives, as mentioned by two of the sources.
A spokesperson for Shein chose not to provide a comment.
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A potential listing in London could provide a much-needed boost to the struggling market, following one of its most challenging years for IPOs in recent history. Bloomberg’s data shows that only around $1 billion was raised in the UK through IPOs last year, marking the lowest level in decades.
The UK is grappling with a challenge in retaining companies, as many are opting to relocate to the US and other destinations. Last year, chip designer Arm Holdings Plc chose a New York IPO over London, despite efforts by the UK government to encourage a domestic listing for the Cambridge-based company. Additionally, existing listed firms are also shifting overseas; earlier this month, TUI AG shareholders voted to delist from the London Stock Exchange and focus primarily on trading in Germany.
Since Didi Global Inc. was ousted from the New York stock exchange in a crackdown that effectively restricted the initial public offerings (IPOs) of Chinese companies, such offerings in the US have been predominantly small and infrequent. Amer Sports Inc.’s $1.6 billion IPO in February marked the largest Chinese-backed IPO in the US market since Didi’s $4.4 billion raise in 2021 and the first to surpass the $200 million mark during this period.
Shein has faced scrutiny from the US, with Senator Marco Rubio among those urging the SEC to prevent its listing, citing the need for greater transparency regarding its operations in China. Additionally, last year, a US Congress member requested an investigation into Shein’s cotton sourcing from Xinjiang. Moreover, US-China trade tensions have persisted for several years.
A trailblazer in the realm of ultra-rapid fashion, offering products like shirts and swimsuits priced as low as $2, Shein submitted paperwork for a US IPO last year, aiming for a valuation between $80 billion to $90 billion, according to individuals acquainted with the situation. However, private trades toward the end of 2023 assessed the company’s value significantly lower, around $50 billion.
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