Shein is reportedly now looking seriously at London as its Plan B location for this year’s high-profile IPO after the Chinese retail app faced resistance and politicised scrutiny for its first-choice listing in the United States.
It comes starkly against the recent trend in London which has seen companies of varying size and quality exit the London Stock Exchange since Brexit, in search of better valuations and better liquidity abroad.
The likes of Ryanair, Tui and Just Eat moved their listings to Europe, BHP returned to Australia.
CRH, Flutter and Entain have gone or are in the process of going to New York, whilst Cambridge-headquartered ARM Holdings snubbed London with majority owner Softbank preferring Wall Street for its small-float IPO.
The likes of Dechra, The Restaurant Group, Hotel Chocolat, Ergomed and others have been picked off by private equity deal makers at generally opportunistic knock-down prices.
Eyes will potentially also soon look to the future of Curry’s which is said to be the subject of a mini US vs China tug-of-war – with Chinese e-tailer JD.com reportedly rivalling a £700 million takeover approach by US private equity firm Elliot.
If its London float is confirmed, Shein provides the City and LSEG with some respite from the exodus narrative, the question will then be whether it’s merely a special case – or perhaps a sign of things to come.
Perhaps Shein could provide a blueprint for Chinese tech stocks which generally have faced scrutiny both in America and also domestically in China.
With a Trump return to the Whitehouse a live possibility, likely bringing with it more China trade war rhetoric, the US may be an increasingly less hospitable marketplace for Chinese equities which include an array of now prominent digital retailers like JD.com and electric vehicle makers including BYD and XPing among other sectors.
Kathleen Brooks, research director at trading platform XTB, is not convinced however, as her market commentary today reckoned London was not suddenly seen as an attractive venue for Shein.
“This is largely down to regulatory issues with its New York IPO, its preferred location, rather than the LSE becoming a destination for multi-billion dollar companies. Hence any euphoria at Shein potentially listing in London is likely to fade quickly,” Brooks said.
“If Shein does list in London, it is unlikely to lead to a surge in Chinese firms listing in the capital, instead it could be a temporary measure until trade relations between the US and China improve, or it chooses to list in Singapore or Hong Kong.
“The UK IPO market raised a mere £1bn last year, as big firms shun listing in the UK.
“If Shein does list here it could have a valuation of $50bn, which would be one of the biggest IPO listings London has ever seen.”