- Filing could come as early as this week
- £50 billion valuation likely
- Boohoo and ASOS feeling the heat
Reports suggest that online fast-fashion sensation Shein plans to file a confidential prospectus with the FCA (Financial Conduct Authority), potentially as early as this week, as the retailer edges closer to an IPO (initial public offering) on the London Stock Exchange that could value the business at around £50 billion.
Should a London IPO go ahead, China-founded Shein is expected to look to raise over £1 billion from the sale of new shares to investors.
The flotation would boost a London market starved of big new issues in recent years and suffered an exodus of firms, lost to takeovers or switching their listings to Wall Street. Shein’s UK online fashion rivals, including ASOS (ASC) and Boohoo (BOO:AIM) will be worried about the heightened competitive threat.
READY TO STRUT ITS STUFF
Sky News reported that Shein’s confidential filing could take place as soon as the coming week, although it could yet take place later this month.
Valued at $66 billion in its last fundraising Shein, founded in China but headquartered in Singapore, wanted to list in New York.
However, its Wall Street ambitions have been thwarted by political opposition across the pond amid escalating tensions between Washington and Beijing, so it has readied itself for a London listing instead.
City sources said the filing could take place as soon as this week, or later this month, although the timing of the filing does not necessarily indicate when Shein will IPO; a summer or early autumn debut on the London Stock Exchange remains on the table.
CLOAKED IN CONTROVERSY
Originally launched as ‘SheInside’ in Nanjing, China, in 2011, Shein’s meteoric rise powered by the sale of low-cost garments has stunned the fashion world.
But its ‘test and repeat’ model of churning out cheap togs has proved controversial and seen the company labelled the ‘unacceptable face of throwaway fast fashion’.
Shein, which bought British fashion brand Missguided from Frasers (FRAS) last year, has been at the centre of controversy surrounding its use of cotton from China’s Xinjiang region and other issues related to workers’ rights and its sprawling supply chain.
THE EXPERT’S VIEW
AJ Bell investment director Russ Mould pointed out that Shein may find the glare of a public market listing uncomfortable ‘given concerns about its governance, supply chain and business practices. Boohoo’s recent history provides a salutary lesson here.
‘Clearly London will want the IPO to be a success to help rebuild its reputation as a listing venue so there’s a lot riding on it for both parties,’ said Mould.
‘Shein is smart in its use of social media and has the ability to turn around new items incredibly quickly to suit customers’ shifting tastes. However, it may increasingly bump up against a change in attitudes in the West towards fast fashion – with Gen Z increasingly concerned about sustainability and less willing to take a disposable attitude to fashion.’
DISCLAIMER: Financial services company AJ Bell referenced in this article owns Shares magazine. The author of this article (James Crux) and the editor (Steven Frazer) own shares in AJ Bell.
