Shein Explores Exception to London IPO Regulations
HONG KONG/LONDON (Reuters) – Fast fashion giant Shein is reportedly seeking a waiver from the UK’s Financial Conduct Authority (FCA) to bypass the requirement that at least 10% of its shares be floated to the public in its planned London IPO, according to sources familiar with the matter.
This move aims to streamline the initial public offering (IPO) process, marking what could be the first time a London listing falls below the 10% minimum threshold introduced in 2021.
Shein’s Confidential Filing
The Singapore-headquartered retailer, known for its affordable $5 tops and $10 dresses, filed confidentially with the FCA in June. The approval process for its London listing, however, has faced delays. As Reuters reported last week, the regulator is taking longer than usual to greenlight the application.
A spokesperson for Shein declined to comment, while sources familiar with the situation requested anonymity as they were not authorized to discuss the matter publicly.
Record-Breaking IPO Potential
Shein was last valued at $66 billion during a fundraising round in 2022. A 10% float at that valuation would yield an IPO worth $6.6 billion, potentially dwarfing Europe’s largest IPO this year: Puig’s $2.9 billion deal, per Dealogic data.
However, the exact amount Shein plans to raise, along with its current valuation, remains undisclosed.
London’s Listing Rules and Recent Reforms
In 2021, the UK reduced the minimum float requirement from 25% to 10% to attract more companies to list on the London Stock Exchange (LSE). This change aimed to enhance London’s competitiveness as an IPO hub, especially against New York and the European Union.
Further reforms in July 2023 marked the largest overhaul of UK listing regulations in more than three decades, emphasizing flexibility to better compete globally.
A Shift from New York to London
Earlier this year, Shein began exploring a London listing, shifting its focus from an original plan to list in New York. The pivot followed opposition from U.S. lawmakers, Reuters reported in May.
The company is also awaiting approval from China’s securities regulator, which must endorse Shein’s plans for an international IPO.
Revenue Growth Signals Investor Appeal
Despite regulatory hurdles, Shein’s financial trajectory remains impressive. According to Coresight Research, Shein’s revenues are projected to hit $50 billion in 2024, marking a 55% increase compared to the previous year.
Shein’s Strategy Amid Tightening Competition
Shein’s push for a London IPO aligns with broader efforts to solidify its global presence. The fashion retailer has faced increasing competition from rivals like Temu and Zara, driving its need to secure significant funding to maintain its edge.
Additionally, the IPO could provide liquidity to early investors, including major venture capital firms like Tiger Global and Sequoia Capital, further boosting confidence in Shein’s growth prospects.
Broader Implications for London’s Financial Hub
If approved, Shein’s IPO could serve as a landmark for London, potentially attracting more high-profile global companies to list on the LSE. Analysts believe it could reinforce the city’s reputation as a financial hub, especially as it continues to compete with Wall Street and EU markets for international listings.