Chinese fast fashion giant Shein is preparing to join the London Stock Exchange in a deal worth £50 billion in what would be its biggest ever share debut for more than a decade.
The online retailer, known for quickly launching new products at ultra-low prices, is preparing to file registration papers with the Financial Conduct Authority ahead of a possible listing later this year, Sky News reports. it is reported.
The filing does not mean a listing is imminent, and sources close to the company have tried to dispel rumors that Shein will soon join the market.
However, This marks the first step in the initial public offering (IPO) process and signals that Shane is seriously considering listing in London.
The Shein flotation will be the biggest IPO in London since Glencore went public in 2011. The £38 billion deal gave the moribund stock market a much-needed short squeeze.
London is struggling to shake its image as a backwater market in decline following an exodus of companies and a lack of new listings.
Bringing in Shein «could lead to more capital flowing into the UK and this will hopefully lead to more interest in UK PLC,» says Liberum analyst Wayne Brown.
This is a sign of the interest the company has . In Westminster, senior figures from both Labor and the Tories have met with Shane's representatives in recent weeks.
Shadow Business Secretary Jonathan Reynolds recently met the group, while Shane's executive chairman Donald Tan met Chancellor Jeremy Hunt earlier. year.
A Labor Party spokesman confirmed the party met Shane as part of its routine meeting with companies looking to invest or list in the UK.
However, luring Shane to London could bring less upside than expected.
The company's interest in the market is less a vote of confidence in London and more a reflection of its efforts to list on the US stock market.
Shane has been planning to list in New York since last year. but has faced opposition from authorities and politicians amid ongoing tensions between the United States and China.
Senator Marco Rubio, a former Republican presidential candidate, led a campaign against Shein's plans after the company confidentially filed a bid at its IPO last November.
Cotton supply is a concern, with much of China's cotton coming from Xinjiang, where Uyghur forced labor is believed to be used.
Shein is offering T-shirts for just £4, a price many consider unrealistically low. In April, Rubio said it was «highly likely that these companies facilitated the import of goods produced using forced labor.» >Much of China's cotton comes from Xinjiang, where Uyghur forced labor is said to be used. Photo: Pulati Niyazi/VCG via Getty Images
Earlier this month, a group of about two dozen US lawmakers called on the Securities and Exchange Commission (SEC) to stop floating until Shein confirmed that he was not using forced labor from Uyghurs .
A spokesman said: “Shane has a zero-tolerance policy towards forced labor and we are committed to respecting human rights. We take transparency throughout our supply chain seriously and require that our contract growers only source cotton from approved regions.»
Under current circumstances, the decision on whether to investigate Shane's supply chain claims is likely to be uncertain. will be accepted by the Labor Party.
The party may decide to consider the deal on national security grounds, although it is understood that Labor does not currently consider the IPO to be a threat.
A party spokesman said: «We expect the highest regulatory standards and business practices from any company operating in the UK. We believe the best way to achieve this is to have more companies operating and regulated under UK law.»
The big concern, at least for the London market, may be whether Shane will be embraced by City investors.< /p>
«I'm sceptical,» said one fund manager.
The fund manager also raises concerns about the structure of the reported deal. Shane hopes to raise £1 billion by selling just 5% of the company's shares, leaving investors at the mercy of majority shareholders.
«It's a sign of how desperate London is to list,» said a fund manager who invests in FTSE 100 shares. 'This is a sign of weakness in London.'
Many fund managers say they would also prefer to see a steady stream of smaller companies entering the market rather than giants like Shane. Technology start-up Raspberry Pi is often touted as a company fund managers would like to invest in.
The group said on Monday it expected a valuation of up to £540 million when it goes public at a later date. this month, significantly exceeding the previously planned £400 million.
Shein also risks knocking out other London-listed companies. The Telegraph recently reported that top British leaders are concerned about tax loopholes that could allow Shein to sell products cheaper than British rivals.
By shipping custom orders directly from factories in China, the company avoids the tax levied on wholesale import. which other retailers face when sending orders to their UK factories.
«This raises the question: is Shane on a level playing field with growing British companies?» says Liberum's Brown. Competitors also claim Shane is infringing on an industrial scale. The company is said to have computer algorithms that scan the Internet to determine which products are selling well. The company combines this data with China's vast textile manufacturing strength, allowing it to quickly launch competitors' products.
H&M sued Shein in Hong Kong, claiming he copied its designs, while a rival lawsuit was most recently filed in the US. A year ago, said the company «has gotten rich by committing isolated violations over and over again.»
Shane said the company «takes all allegations of infringement seriously and takes swift action when complaints are filed by actual intellectual property rights holders «
Brown believes the lawsuits are just sour grapes.
“His business model is phenomenal. You have a business based on an innovative approach to real-time retail that provides fast production and delivery of trendy fashion products at affordable prices. By eliminating these middlemen through a direct-to-consumer model, you can leverage low-cost manufacturing.
“This is a true digital disruptor that is very tech-savvy.”
However, the risk is That such problems could derail any voyage is a matter of grave concern. And if the £50bn flotation goes wrong, it will only add to the chill gripping the London market.
As Brown warns: “Any good story that brings liquidity and encourages people to view the London stock market as a good place to raise capital, and a good place to raise capital should be looked upon favorably.
“But I think you need to answer some of those tougher questions that come up.”
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