Fast fashion giant Shein is reportedly set to switch its blockbuster listing from London to Hong Kong in a huge blow to the City.
Chinese regulators have not given it permission to list in the UK, in an embarrassing setback after British regulators and ministers made a big effort to entice it to come here.
Shein has now turned to an initial public offering (IPO) in Hong Kong, where it believes it can list within the year, news agency Reuters reported.
The retailer, founded in China and now based in Singapore, is expected to file documents with the Hong Kong stock exchange in a huge setback for Chancellor Rachel Reeves, who recently said she would welcome new listings, as well as for London Stock Exchange boss Dame Julia Hoggett.
Hoggett has said she would ‘fight for everything’ to attract firms. It had been hoped Shein would mark a new chapter for the beleaguered Square Mile.
Instead, with few significant floats on the horizon, it will be left fighting a rearguard action to hold on to its biggest players.
Denied: Chinese regulators have not given Shein permission to list in the UK, in an embarrassing setback following a major persuasive effort by British regulators and ministers
While the New York stock market has seen 136 flotations this year, London has hosted eight, say analysts at AJ Bell.
Magnum maker Unilever’s choice to list its ice cream division in Amsterdam dealt the City a bitter blow in February, after a protracted charm offensive by UK ministers.
And Shell has been eyeing a switch to New York amid a slump in its valuation.
Shein was given a green light to list by the UK’s Financial Conduct Authority (FCA) in March despite concerns raised about its supply chain in China.
But Chinese authorities are likely to have been taken aback at the intense scrutiny of Shein by MPs on the business and trade select committee.
Setback: London Stock Exchange boss Dame Julia Hoggett (pictured)
In January, Shein’s UK top lawyer Yinan Zhu declined to comment on whether its cheap clothes were linked to slave labour. It prompted MPs to accuse her of being ‘disrespectful’ and ‘ridiculous’.
Shein has been accused of sourcing cotton from Xinjiang in China where it is claimed Uyghur minorities suffer forced labour and genocide. The company rejects these claims.
Susannah Streeter, head of money and markets at Hargreaves Lansdown, said: ‘The barrage of criticism, which looked set to intensify, is considered to be partly why Chinese regulators were reluctant to give the IPO the green light.
‘This will be a blow for London’s ambitions to attract bigger names, but given the obstacles piling up, it’s not surprising that the company seems to be veering off in another direction to raise capital for further expansion.’
Kathleen Brooks, research director at XTB, said the snub could be a ‘blessing in disguise’ due to political tensions, adding: ‘The difficult relationship between Beijing and Washington, and the UK’s desire to stand shoulder to shoulder with the US could have made listing more trouble than it was worth.’
The Chancellor last month insisted it would be ‘foolish’ to stop engaging with China.
‘We do want to welcome new listings,’ she said. The FCA and the London Stock Exchange declined to comment. Shein was contacted for comment.
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