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Shein is considering London as a back-up option for a blockbuster flotation if US regulators block the online fast-fashion group’s preferred choice of a New York IPO over its ties to China.
The Singapore-headquartered company has pitched the UK as an alternative destination if it is unable to list in the US, according to two investors in the company.
One of these people said that Hong Kong had also been considered, but had decided against listing in the city, citing its stock market’s recent poor performance.
While Shein continues to pursue a US listing as a priority, the UK has become an alternative as politicians in Washington probe the company’s ties to China, such as its alleged use of cotton from Xinjiang.
The company was originally founded in China, and relies on sellers and factories in the country to produce the cheap goods that underpin its fast-growing business.
British government figures said that Shein chair Donald Tang requested a meeting with chancellor Jeremy Hunt last month. They added that during an “introductory chat”, Tang said he “didn’t like what the [Securities and Exchange Commission] was doing in the US” and that he was looking at a possible listing in London.
“We aren’t pushing them but of course would welcome an IPO,” said a UK government official.
Shein declined to comment. Sky News first reported that Shein was considering a London IPO and the company’s talks with the UK government.
Should Shein switch to London, it would be a rare win for the city, which has struggled to attract major listings.
In recent years, London has lost out on high-profile listings of Cambridge-based chip designer Arm Holdings, factory parts supplier Rubix, building materials group CRH and soda ash producer WE Soda.
However, the fast-fashion group filed paperwork with the SEC to list in the US at the end of last year, where it expects to fetch a higher valuation than in the UK. Shein was valued at more than $60bn in its most recent private fundraising round last year, down from a peak of $100bn.
The UK Treasury said: “We have developed reforms to boost the UK as a destination for IPOs, including making it easier for companies to list more quickly,” adding: “The government does not comment on individual companies — it is for individual firms to decide where to list.”
Shein has also approached Beijing for approval for its planned overseas listing, which several people close to the company and the regulator expect to come through.
This month US senator Marco Rubio wrote an open letter to SEC chair Gary Gensler urging the regulator to demand “enhanced disclosures” from the company to approve the IPO. He wrote that Shein’s move to approach the regulators in Beijing to approve its IPO “raises serious doubts that its IPO filings are complete and accurate”.
Sir Iain Duncan Smith, co-chair of the UK’s Inter-Parliamentary Alliance on China, an international network of legislators with a hawkish stance on Beijing, said he was worried about Chinese companies using slave labour in their supply chains and urged the government to investigate which fields and factories were involved in the creation of Shein’s clothing.
“If a company moves to London, you need to do due diligence on their whole production line,” he said. “If they sell their product over here, they should be tested.”
The former Tory leader urged the UK government to commission private sector companies that conduct origin verification on products, via forensic and data science techniques, to perform the due diligence.
Shein has sought to clean up its supply chain ahead of its planned listing. It ditched a number of its suppliers in the southern coastal province of Guangdong after it found that they violated their certification requirements.
Additional reporting by George Parker in London
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