Analysts: Shein float in London would set off investor ESG alarm bells
Fast fashion giant Shein has reportedly spoken to London stock market bosses about shifting a planned IPO from Wall Street to the capital.
Senior figures from the retailer reportedly met LSE chiefs last week, according to Sky News’ Mark Kleinman.
The online retailer is valued at around $80bn but has been embroiled in controversy in recent years over its working practices and a lack of transparency.
Shein – founded in China but now headquartered in Singapore -was reported to have filed paperwork with the US authorities as recently as last month to launch the process of a Wall Street float.
But according to Kleinman, LSE figures met chairman Donald Tang whilst in London last week to discuss the possibility of a UK float.
The firm has expanded its footprint in the UK already this year, with the unexpected purchase of troubled retailer Missguided from Frasers last month.
Sources suggested that a US float was the most likely conclusion but even if Shein was to choose London, a float here would not be without controversy.
Shein has been widely criticised over its working practices. Fashion Revolution, campaigners for better conditions in the industry, gave Shein an overall rating of 7 out of 100 after looking at its policies, governance and the traceability and transparency of its materials.
The company has been accused of using forced labour in Xinjiang, an allegation the firm denies. Analysts said a London float would be seen as a shot in the arm for the embattled London public markets but would come with awkward questions both for the company and the for the bourse.
“Either (London) will be criticised for losing out on the deal or, if it gets it, London might be caught up in further scrutiny of Shein’s supply chain and the ethical and ecological issues that surround the fast fashion model,” Russ Mould, investment director at AJ Bell told City PM yesterday.
And Susannah Streeter, head of money and markets at Hargreaves Lansdown, warned “Shein has come under significant criticism for the huge volumes of cheap clothes it produces, the lack of transparency in its supply chain and its appropriation of other designers’ work. Given these concerns there may well be wariness among investors who put ESG in their priority list, if the firm does list in London.”
Shein and the London Stock Exchange declined to comment.