Shein has filed for an IPO in Hong Kong to push for a London listing - FT

Chinese online retailer Shein has filed a confidential application for an IPO in Hong Kong. This is an attempt to speed up the protracted process of going public, and at the same time an opportunity to put pressure on the British regulator to approve the listing in London, writes The Financial Times. The company has long been struggling to list in London, but analysts doubt that approval from the Chinese regulator will help influence the British regulator. However, the option of a dual listing is not ruled out;

Shein last week confidentially sent a draft share prospectus to the Hong Kong exchange and also sought approval for the initial public offering from the China Securities Regulatory Commission, two sources told the FT. 

According to the newspaper's interlocutors, the move is partly aimed at forcing the British regulator to relax its requirements for the company and preserve its chances to float on the London Stock Exchange, which could become the largest IPO on that platform in recent years;

FT sources added that Shein still favors London - because of its more diversified and mature investor base. CNBC also describes its international legitimacy. However, Hong Kong's exchange will be more loyal, says the FT, especially since Beijing is actively promoting it as the preferred venue for overseas listings. 

At the same time, one of the newspaper's interlocutors did not rule out that even if the Chinese commission approves the listing of Shein in Hong Kong, the British regulator will still be able to consider the possibility of approving the IPO in London on the basis of this document. In this case, the company may explore the option of dual or secondary listing. However, the probability of approval by two regulators at once is estimated as low;

Shein and regulators in both countries declined to comment to the FT. 

About 18 months ago, Shein applied for a flotation in London but ran into difficulties. British and Chinese regulators could not agree on what wording should be used in the risk disclosure section of the prospectus. Although the retailer is registered in Singapore, it was founded in China and much of its supply chain is based there, and such companies need Beijing's approval even when going public on overseas exchanges;

The disagreement centered on Shein's supply chain and its connection to the politically sensitive Xinjiang region - Beijing has been accused of human rights abuses against the indigenous Uighur population there. The authorities deny this.

The British Financial Services Authority approved a version of Shein's prospectus earlier this year, but the Chinese Securities Commission did not accept it. As a result, the company refused to float in London in May, Reuters reported, and decided to change venues. 

Analysts questioned by CNBC are skeptical of the idea that approval from Chinese authorities could prompt the British regulator to make similar concessions.  "Even if the Chinese authorities agree a prospectus, a listing in London would still need to go through all the approval stages at the Financial Services Authority, so there are still a lot of hurdles to overcome," Suzanne Streete, head of market and investment analysis at Hargreaves Lansdown, told the network

Nevertheless, she said, continued pressure from the UK regulator could encourage change at the company. "ESG laggards carry high risks, but there is a view that investment opportunities may lie precisely in transformation. A Shein listing could make the company more transparent and accountable to shareholders, who would be empowered to influence improvements in standards," she said.

The history of Shein's attempts to go public is longstanding: before facing difficulties in London, the company had to refuse to list in New York because of resistance from U.S. lawmakers, CNBC writes. Инвесторы в США оценили бы ее выше, говорил ранее аналитик Renaissance Capital А For the London IPO, Shein was willing to lower its valuation to $50 billion against the $66 billion -valuation from its 2023 funding round, Reuters recalls.

Although the company has about $12 billion in cash, and there is no immediate need for an offering, its investors and advisers are pushing to speed up the process, the FT notes. Doubts about the IPO's prospects also stem from declining profits. As the publication wrote in February, in 2024, Shein's revenue rose 19% to $38 billion, but net profit fell almost 40% to $1 billion. However, sales in the U.S., which generate a third of revenues, were stronger than expected. Sources told the FT that the profitability of the business improved after rival Temu reduced activity in the US market due to higher duties.

This article was AI-translated and verified by a human editor