- Fast-fashion firm ‘chasing local listing’
- Potential tactic to get London go-ahead
- Investors need to weigh up opportunity
Chinese fast fashion giant Shein has been mooted for a London IPO (initial public offering) for months, yet still investors wait.
Meanwhile, reports are now emerging the company has filed paperwork to list in Hong Kong as a way of putting pressure on the UK regulator to green-light a listing.
‘Chinese regulatory requirements are different to the UK, so Shein might simply be trying its luck in thinking the FCA would accept a Chinese-approved prospectus and bend the rules because it’s presenting a ready-made IPO on a silver platter,’ wrote AJ Bell investment analyst Dan Coatsworth.
POLITICAL HOT POTATO
You can see why UK authorities are having to think carefully about letting the retail platform float in the capital. There are ongoing concerns over Shein’s transparency, ethics and corporate governance which could make a London listing a political hot potato Rachel Reeves and Co could do without.
At the same time, the UK is desperate for big-name companies to join the London market after years of dour performance versus other stock markets that have seen a multitude of ‘best of British’ firms sold to overseas buyers on the relative cheap.
FTSE 250 industrial controls expert Spectris (SXS) is the latest, its board agreeing a £4.1 billion takeover by US private equity firm KKR a week ago, although that deal is still awaiting approval from shareholders.
Few anticipate any problems, considering that the firm was being valued at half that price before the buyout emerged and about half as much as Spectris’ valuation of four years ago.
WHAT’S IN IT FOR UK INVESTORS?
UK investors might well wonder if Shein is worth the bother. It is just another low-margin seller of cheap clothing in an already crowded international space… think Temu, Alibaba, Amazon (AMZN:NASDAQ), of course, plus a plethora of national and international supermarket chains, such as Walmart (WMT:NYSE).
‘Until there are answers to the smorgasbord of questions, it’s hard to see Shein heading for London’s market anytime soon,’ opined AJ Bell’s Coatsworth.
DISCLAIMER: Financial services company AJ Bell referenced in this article owns Shares magazine. The author of this article (Steven Frazer) and the editor (Ian Conway) own shares in AJ Bell.
