Shein Chooses Hong Kong IPO, Bypassing London Despite UK Push

Shein has decided to pursue its initial public offering (IPO) in Hong Kong, bypassing London despite a yearlong campaign by UK officials to attract the fast-fashion giant. The listing could have been one of the largest on the London Stock Exchange in a decade.

The move, reported by Reuters, underscores the challenges facing the UK equity market, which has struggled to secure high-profile listings. Shein’s decision follows the UK’s approval of its IPO application but reflects broader trends as companies increasingly look elsewhere for capital.

“Shein’s listing would have been a welcome signal for the market,” said Alasdair Steele, corporate partner, CMS. “However, one major IPO alone cannot resolve London’s broader challenges.”

The UK government revamped its listing rules last year to make its markets more competitive, but the results have been limited. Year-to-date, UK equity capital market deal values have fallen 16% to US$9.2 billion, compared to the same period in 2022, and are more than 70% below 2021 levels, according to Dealogic. In contrast, Hong Kong’s deal values have surged nearly fivefold.

Shein’s largest market is the United States, but the company faces increasing pressure from shifting trade dynamics. The removal of a US duty exemption for small packages from China has strained its low-cost model. Additionally, Shein has lowered its valuation expectations and faced scrutiny over its supply chain practices.

The company has denied allegations of sourcing cotton from China’s Xinjiang region, where concerns about forced labor persist. Shein maintains a zero-tolerance policy on forced labor and requires suppliers to meet strict sourcing standards.

“The risks associated with Shein’s supply chain transparency and human rights allegations were already raising investor concerns about a UK listing,” said James Alexander, CEO, UK Sustainable Investment and Finance Association.

Shein’s decision adds to a series of setbacks for London. Earlier this year, Unilever chose Amsterdam for its ice cream division listing, while companies like Shell and Flutter have either moved or considered relocating their listings.

The company has not commented on its IPO plans.