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Online fast-fashion group Shein has a backup plan to seek a listing in Hong Kong as its ambitions for an initial public offering in London face growing scrutiny in the UK and China.
Singapore-based Shein is keeping alive a backup option to list in Hong Kong despite filing confidential papers with Britain’s financial regulator earlier this month as a prelude to a London IPO, five people familiar with the situation said.
While a London flotation could give the China-based e-commerce group a market valuation of £50bn – a blockbuster hit in otherwise lackluster UK capital markets – Shein is also facing pushback against the plan. This ranges from activists who have launched a legal challenge to some fund managers who have warned that a UK listing could “struggle” to win investor support.
His fallback version of Hong Kong underscores the complex geopolitics Shein is trying to navigate as he treads the line between an increasingly assertive Beijing and Western standards of corporate governance.
Shein’s plans remain in flux, and it’s not certain that he’ll end up on the London Stock Exchange, though that’s the company’s current focus, warn people familiar with the matter. The group’s Chinese ties disrupted previous plans to go public in New York, an ambition the fast-fashion group abandoned after a barrage of criticism over issues including its supply chain and alleged links to forced labor in China’s Xinjiang region, which Shein denies.
The company’s founder, Sky Xu, is pushing for an IPO by the end of the year, under pressure from investors and growing concerns that the company’s explosive growth will begin to slow in key markets, several people close to the company said. company. They added that trading in the foreign market would help Shein distance itself from China, where it was founded in 2008 and still accounts for most of its employees and production.
However, Shein has still not received approval from the China Securities Regulatory Commission to list in London. The company would also need prior approval from other Chinese authorities that are scrutinizing its offshore business model, according to a person familiar with the matter. It is not clear whether this consent has yet been reached.
“If the CSRC didn’t approve of London, they probably would have let Shein know. So the fact that they went ahead in London means that the CSRC is unlikely to favor Hong Kong over London,” said Ming Liao, founder of Beijing-based venture capital fund Prospect Avenue Capital.
He added: “Shein relies heavily on China’s agile supply chain and any due diligence on the IPO could reveal some related information, which is one of Beijing’s concerns.”
Chinese regulators would typically wait for the British regulator to approve such a listing, said an adviser who helps Chinese companies abroad but does not work with Shein. Britain’s watchdog, the Financial Conduct Authority, has not made any public statements about Shein.
The company could also aim for a dual listing in Hong Kong, said two people familiar with its plans, one of whom added the latter possibility. It also largely abandoned plans for such a presence in New York after difficulties with U.S. regulators, one of the people said.
While Hong Kong is a backup option, its capital markets have faced challenges of their own amid subdued trading and fewer new listings. Xu is also less enthusiastic and would see it as an “admission of failure,” said one person close to the company. The foreign IPO push was primarily to be listed on a Western market that has no ties to China, in an effort to distance Shein from Beijing, another person added.
However, Šejna’s foreign plans could fall victim to international geopolitics as the UK prepares to elect a new parliament next week.
“If in the process the British government makes any policy statements that make China look bad, such as on Taiwan issues, the CSRC would probably ask Shein to cancel the IPO,” said an adviser who helps Chinese companies.
One former senior Shein employee said, “Overseas plus HK would be perfect: [it would keep] Shein’s ties to China and image as a global firm in terms of business and user base.”
A representative for Shein declined to comment.
Additional reporting from Ryan McMorrow and Tina Hu in Beijing, Kaya Wiggins in Hong Kong and Laura Onita in London