Online fashion giant Shein Group will carry out investor roadshows in the coming weeks to test the water ahead of its planned £50 billion London listing in the first quarter of 2025.
Having quietly held meetings with several large institutional investors in the past year, the Chinese company will go on the road and field more fund managers’ questions to test investment appetite, the Times has reported.
Today's report is little changed from those a month and a half ago when the fast-fashion group's management started working on plans for UK investor roadshows.
Progress seems to be very slow, City commentators noted, after the company decided in the summer against listings in New York and Singapore due to regulatory pushback.
Shein confidentially filed papers with the UK markets regulator in June, but at that time, it was said no final decision had been made regarding the timing or size of the IPO.
The new year is now the aim, subject to regulatory approvals.
Shein's flotation overseas relies on receiving China Securities Regulatory Commission approval, though the newspaper said it was not clear if the company has not received any guidance on the London move yet, with the regulator having told the company it would not recommend a New York listing due to the company’s supply chain issues, Reuters has reported.
Growing fast, but listing is slow
Latest results from the group showed it sold £1.55 billion of products last year, a 38% increase on the 16-month previous period, while pre-tax profit more than doubled to £24.4 million.
Despite its money-making abilities and fast pace of growth across multiple geographies, the company is having to work abnormally hard to prove its credentials to investors and regulators.
"Normally it doesn’t take this long to bring a company to market," said Russ Mould, investment director at AJ Bell. "One can only imagine the number of questions from prospective investors, given uncertainties around business practices, supply chains, corporate governance, alleged intellectual property infringement, costs, margins and tariffs."
A company with the same top-line financial credentials would normally be "a no-brainer" for investors, he said, "however, there is an element of ‘it’s too good to be true’ with Shein that makes it a harder investment decision".
"Many people think there is a catch with how it is able to sell goods so cheaply – namely that it is using a supply chain that relies on workers that are poorly paid and poorly treated."
While many investors are not worried about these issues, Shein will need to rigorously prove this is not the case if it is to get enough investors to justify its full IPO valuation.
Said Mould: "Fund managers might like the potential earnings growth on offer from Shein, but few are going to risk their career by backing a business if there proves to be skeletons in the closest.
"They might rather miss an opportunity than go all-in and then be associated with a bad egg, should that turn out to be the case."
He pointed to Deliveroo’s IPO in 2021, saying many fund managers shunned the initial funding amid concerns over workers’ rights, leading to its shares being priced at the bottom end of the guided range and the company earning the nickname ‘Floperoo’ when the shares fell 26% below their listing price on day one.
"Shein’s advisers will be desperate for the retailer not to follow in Deliveroo’s steps."
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