Shein will consider London as a backup option for a massive flotation if US authorities block its preferred choice of a New York IPO due to its ties with 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 them said that Hong Kong was also considered but decided not to list in the city due to its recent poor stock market performance.
Shein is still pursuing a US listing, but the UK has emerged as an alternative, as Washington politicians probe the company’s ties with China, including its alleged use cotton from Xinjiang.
The company, which was founded in China in 1997, relies on the sellers and factories there to produce its cheap products that are the foundation of its rapid growth.
British government officials said that Shein chairman Donald Tang requested a meet with chancellor Jeremy Hunt in the last month. They said that Tang, during an “introductory conversation”, had stated that he did not like the Securities and Exchange Commission’s actions in the US and was considering a listing in London.
A UK government official said: “We don’t push them, but would of course welcome an IPO.”
Shein declined comment. Sky News reported first that Shein had been considering a London IPO, and that the company was in talks with the UK Government.
If Shein switches to London, this would be a rare victory for the city which has struggled in recent years to attract major listings.
London has missed out on a number of high-profile listings in recent years. These include Cambridge-based Arm Holdings and factory parts supplier Rubix. Also, building materials group CRH, as well as soda ash manufacturer WE Soda, are all based in Cambridge.
The fast-fashion group has filed documents with the SEC for a listing in the US, where they expect to get a higher valuation in the US than in the UK. Shein’s most recent private fundraising last year valued the company at over $60bn, down from its peak of $100bn.
The UK Treasury stated: “We’ve developed reforms to promote the UK as a destination of IPOs. This includes making it easier for firms to list faster.” They added: “The government doesn’t comment on individual companies. It is up to individual firms to determine where to list.”
Shein also approached Beijing to get approval for its planned listing overseas, and several people connected to the company as well as the regulator expect that this will happen.
In an open letter, Marco Rubio urged Gary Gensler, the SEC chairman to require “enhanced information” before approving the IPO. He said that Shein’s decision to contact regulators in Beijing for approval of its IPO raises serious doubts about the accuracy and completeness of its IPO filings.
Sir Iain Duncan Smith is the co-chairman of the UK’s Inter-Parliamentary Alliance on China. This international network of legislators has a hawkish position on Beijing. He said that he was concerned about Chinese companies using slavery in their supply chain and asked the government to investigate the fields and factories involved in the production of Shein’s clothing.
He said that if a company moved to London you should do due diligence to their entire production line. “If they sell the product here, it should be tested.”
Former Tory leader, The former Tory Leader, urged the UK Government to commission private sector firms that perform origin verification on products via forensic and Data Science techniques to perform due diligence.
Shein is cleaning up its supply chain in preparation for its planned listing. Shein has sacked a number suppliers from the southern coastal province Guangdong, after finding that they had violated certification requirements.