She in, the online retail giant founded in China, had big ambitions to go public in New York. But as relations between Washington and Beijing deteriorated, the ultra-fast fashion company began looking more closely at a backup plan on the other side of the Atlantic.
The company is now focusing more on the London Stock Exchange for its IPO, according to two people with knowledge of the matter. That may not have been the company's first choice, but it would be a major victory for Britain, which was wary of losing its status as a global financial center.
Jeremy Hunt, Britain's top financial official, has done just that reportedly courted Shein, expecting that a major IPO would cement London's position as one of the world's leading financial centres. A Shein spokeswoman declined to comment; the British Treasury also declined to comment.
In many ways, London is still a crucial financial center, where precious metals prices are set every day, trillions of dollars of foreign currency are traded and global insurance contracts are written. But global competition for investors – between cities such as New York, Hong Kong, Dubai and Singapore – is fierce. Stock listing is a prominent business, and a major IPO like Shein's can be seen as a prize that strengthens the local financial market and paves the way for other companies to follow.
In an effort to strengthen London's position, British officials are trying to reform the financial sector to make the city's stock market more attractive to modern industries, especially technology companies, rather than relying on the sectors, such as banking, that have historically built London's financial sector. sector.
London's reputation The financial sector also took a hit following Britain's departure from the European Union, amid concerns that banks would move money and workers to the continent. Some of those fears were exaggerated, but Brexit has taken its toll. For example, Amsterdam overtook London as Europe's largest trading center about three years ago, according to Cboe Capital Markets.
The emphasis on attracting stock market listings to London is partly due to pride, says Gbenga Ibikunle, professor of finance at the University of Edinburgh Business School.
“London used to be recognized as the center of the financial world,” he said. “We know that is no longer the case, and that has been exacerbated by the fact that we have left the EU, and so there is less trade, in terms of volumes, in London. And that also reduces some of the power that the market has.”
Aside from pride, analysts say, there are good economic reasons to have a healthy pipeline of listings. First, they support a range of jobs in financial and professional services, from bankers to lawyers. Public companies are also open to increased scrutiny, which can provide greater insight into the state of the economy.
Fears that London is losing its attractiveness for listed companies have increased over the years as several companies, including building materials company CRH and gambling operator Flutter Entertainment, have moved their primary listings from London to New York. Others, such as the oil giant Shellhave admitted to studying the idea.
The departing companies have also not been replaced by a wave of companies going public. Last year, Arm, the British-born computer chip company, made a big splash when it listed its shares in New York. That offer, the largest in 2023, raised almost $5 billion.
New York has long been a destination for IPOs. Many in the financial sector are concerned that the London market, with less trading volume, will lead to lower valuations than the New York exchanges can offer.
There is an advantage to being listed alongside similar companies on the same stock exchange as the rising tide attracts more analysts and investors to focus on those stocks, says Scott McCubbin, who leads EY's UK IPO team and Ireland.
Part of the problem, analysts say, is that the London Stock Exchange is dominated by companies from older sectors such as banking, mining and oil and gas. Britain has struggled to attract listings from tech companies, and high-profile flops have exacerbated the problem. Deliveroo, a London-based food delivery company, went public in 2021 and was called “the worst IPO in London history.” (Shares are down 63 percent from their peak.)
“The rule change now underway means we have to make ourselves much more attractive to technology companies, especially start-ups, and especially companies that don't have a long track record of profitability,” Mr McCubbin said. It's about companies building on “what does the next ten years look like, not what the last ten years looked like.”
But advisers warn that companies considering an IPO in New York must have a natural link to the US market to benefit from trading there. Flutter, for example, generates over a third of its revenue in the United States. Otherwise, mutual fund managers would have little incentive to focus on smaller British companies rather than larger companies that are more relevant to Americans.
The slowdown in supply in London is part of an industry-wide shortage that has persisted for more than a year, amid high interest rates, conflict and geopolitical uncertainty. According to the London Stock Exchange Group, only 16 companies went public in New York last year, an 84 percent drop from 2022; By comparison, ten companies went public in London, a drop of 88 percent.
That said, companies that went public in New York last year collectively raised $9.5 billion, while those in London raised $442.7 million, according to data from the London Stock Exchange Group. But even though London struggles to compete with New York, it is a much more popular destination than its European neighbors such as Paris and Amsterdam.
The British government has announced a series of reforms in recent years to entice companies, particularly technology startups, to raise capital through an initial public offering in London. Britain, for example, has reduced the number of shares a company must have in public hands from 25 to 10 percent and allowed certain dual-class listings in the premium end of the market, changes intended to encourage tech founders who might want to retain more control over their company after an IPO
Other planned changes are expected to make it easier for companies to make major acquisitions or other transactions without shareholder approval.
“We have already implemented some reforms, but the vast majority are currently underway or planned but still to come,” said Julie Shacklady, director at UK Finance, a trade group. “So we don't really see the benefit of the whole of the reforms yet.”
But she said she was “cautiously optimistic” about a market recovery later this year and did not expect an election, even if it led to a new government, to derail the changes.
In case of She inThe company has said part of the reason for going public is to be more transparent in the face of allegations of poor labor and environmental practices. London is believed to have high standards for businesses, with strict reporting requirements and new sustainability rules.
In addition to Shein, dealmakers and London market drivers point to other promising news for the British stock market. Raspberry Pi, a maker of low-cost computers, said it planned to go public in London.
A business adviser said a range of companies owned by private equity firms – which regularly take the companies they own public and provide a regular source of listings – could list on the London Stock Exchange from next year.
As companies debate whether to list in New York or London, Mr Hunt and Bim Afolami, a finance minister, met with technology companies this month to promote Britain as a place to invest money. to collect.
“For a few years we were beating ourselves up, but actually this year we are very optimistic that we have really reached a tipping point,” Mr Afolami said at an event in London this month.