Issue of the week: Shein’s London float
Could a potential mega-listing save the City, or land it with a giant problem?
“In fashion and environment circles its name is close to a dirty word.” But to teens and TikTokkers on a tight budget, said Harriet Walker in The Times, Shein is a veritable treasure trove – and it seems that Britain’s politicians agree. News that the Chinese-owned fastfashion giant will file a confidential prospectus with the City regulator this month brings the prospect of a London listing closer. And now we learn that members of the shadow cabinet, as well as Chancellor Jeremy Hunt, have met Shein’s executive chairman Donald Tang. The retailer could be valued at around £50bn – making it Britain’s largest-ever stock market float. It’s obvious why postBrexit politicians and the beleaguered
City want Shein here. The question is: “do the rest of us?”
A float would put an end to retail’s “longest running will they/ won’t they IPO saga”, said Mark Faithfull in Forbes. Shein is courting London because its preferred option, New York, turned a cold shoulder, owing to the “increasingly frosty business relationship between the US and China”. Although now based in Singapore, the fashion giant, which posted profits of more than $2bn last year, still sources much of its ultra-cheap stock from China – prompting questions about conditions in supply chains. Reports that it used cotton from forced labour in the Xinjiang region have proved particularly controversial. Shein claims it is “strengthening governance and compliance” and has “been at pains to improve its environmental record”. Despite the bad smell, this “mega listing” would be a lifeline for a financial centre desperate to rebuild its reputation, said Bloomberg. The City has seen its share of IPOs dwindle to the lowest in decades and has lost “its crown as Europe’s largest equity market by valuation”. It might even compensate for the “painful snub” of losing home-grown chipmaker Arm to New York. Just a 10% slice of Shein would make it London’s largest first-time share sale since commodities giant Glencore floated in 2011.
Be careful what you wish for, said Michael Bow and Hannah Boland in The Daily Telegraph. Attracting Shein could be a boost to UK plc. But some in the City view its arrival here as “a sign of how desperate London is”, and are sceptical about whether investors will embrace it. Many fund managers would rather see “a steady stream of smaller companies coming to market” than an iffy behemoth like Shein, which risks ruffling the feathers of London’s other listed retailers. This could prove an own goal for the City if the listing is derailed. “If a £50bn float goes awry, it would only deepen the chill running through the London market.”