Shein is eyeing up what has been trailed as a ‘mega IPO’
As Shein eyes up a mega IPO, it’s flotation could re-start the cycle of flotations which has been stuck in the doldrums, writes Simon Neville
Sky Xu is probably the richest person you’ve never heard of but if the Chinese billionaire gets his way, he may be forced out of the shadows.
That’s because the founder of Chinese online retail giant Shein is eyeing up what could be one of the biggest stock market listings in a decade.
Whether the chief wants to step out into the limelight, or just have his company go public, will be a matter for his highly remunerated advisors to decide. But one thing is clear – if he can pull off the rumoured $90bn (£70bn) US flotation next year, it will be a significant indicator to global investors that the appetite for stock market listings has returned.
Last year was a disaster for businesses looking to come to market. Initial public offerings (IPOs) were pulled and those that did make it struggled to impress.
Retail IPOs have been notably absent (bar a few exceptions) for at least a decade as the future of the high street remains up for debate. One only needs to look at former stock market darlings Asos and Boohoo to see just how far their star has fallen.
For reference, Boohoo, whose share price peaked at more than 400p during the pandemic, now sits at around 37p a share today. Asos shares listed in 2008 at 2,350p a share and now trade at around 386p a share. A successful Shein listing would therefore be a welcome boost to the sector.
Signs are good, with the company using AI tools to scrape and monitor social media in the hope of spotting trends and reacting quickly to product new lines across its Chinese factories, which ship direct to consumers.
While the board met with London stock bosses to discuss options, a US listing is far more likely, with consensus that UK listed firms are vastly undervalued.
This raises another interesting point – is the US ready for a major Chinese listing and will the China Securities Regulatory Commission allow it?
Chinese companies need clearance from the regulator before any offshore listing – something that has been difficult in the past, especially if it involves third-party scrutiny of a company’s accounts.
Shein’s supply chain has already faced questions by US law makers, demanding to know whether forced labour had been used – something the company denies.
And any investor roadshow could also include questions on whether Shein’s model of shipping directly from Chinese factories is sustainable, if the tax advantages of such a system are closed down.
But signs are positive and markets move in cycles.
The last major US IPO of a Chinese company was Alibaba in 2014 with a valuation of $231bn. Most saw it as a success and it thrust founder Jack Ma into the spotlight as a darling of the entrepreneur circuit. Admittedly, his charisma would subsequently lead to a public dressing down by the Chinese government, but all the same the listing was seen as a success. Since then, the US has shied away from taking on Chinese listings as geopolitical factors left investors nervous.
But, if Shein and their rumoured army of US-based investment banks can persuade investors and regulators that the concerns of the past have been addressed, then it could spark not only more IPOs but also thaw relations between global superpowers at a time when political sands are shifting.
Finally, for cynical types like me, a successful listing could be the much-needed final nail in the coffin for the special purpose acquisition companies.
It would show investors that there are other options to handing over cash to listed entities on the promise that they might, one day, invest that money into other businesses.
And it might finally help investors realise that it is better to put their money to work where they know there is an audience for the products the company is selling, rather than a vague promise of jam tomorrow, which tends to convince no one.
Shein float will be a godsend for markets – if it can get over the line
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13.12.2023
Shein is eyeing up what has been trailed as a ‘mega IPO’ As Shein eyes up a mega IPO, it’s flotation could re-start the cycle of flotations which has been stuck in the doldrums, writes Simon Neville
Sky Xu is probably the richest person you’ve never heard of but if the Chinese billionaire gets his way, he may be forced out of the shadows.
That’s because the founder of Chinese online retail giant Shein is eyeing up what could be one of the biggest stock market listings in a decade.
Whether the chief wants to step out into the limelight, or just have his company go public, will be a matter for his highly remunerated advisors to decide. But one thing is clear – if he can pull off the rumoured $90bn (£70bn) US flotation next year, it will be a significant indicator to global investors that the appetite for stock market listings has returned.
Last year was a disaster for businesses looking to come to market. Initial public offerings (IPOs) were pulled and those that did make........
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