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Shein appears to be abandoning its hopes for a flotation in London.
The fast-fashion retailer is reportedly preparing to list on the Hong Kong stock exchange as its application to launch an initial public offering on the London Stock Exchange stalls with Chinese regulators, Reuters reported Wednesday. While Shein is headquartered in Singapore, it was founded in China, where the majority of its suppliers remain.
Sources told Reuters that the company aims to file a draft prospectus with Hong Kong’s stock exchange in the coming weeks.
Chinese IPOs down 43%
The delay reflects a broader shift in how Chinese regulators are vetting listings.
A total of 428 IPO applications were withdrawn in China in 2024, according to Yicai Global, marking a 75% increase compared to the previous year. Chinese companies raised approximately $25.2 billion through IPOs last year, according to data across various markets. That marks a 43% decline from the year before. Notable Rejections included bubble tea companies Mixue Bingcheng, Guming Holdings and Auntea Jenny, all of which had hoped to list in Hong Kong.
The trend began when Wu Qing was appointed chief of the China Securities Regulatory Commission (CSRC) in February of last year. In his previous regulatory roles, Qing was dubbed the “broker butcher,” for leading a crackdown on securities firms. He kicked off his tenure by launching a campaign to boost the quality of listed companies and revive China’s struggling stock market.
“Every step of the IPO vetting and registration process should be put under the microscope,” he said, and vowed to “keep fraudsters away from capital markets.”
Quantity over quality
A series of high-profile scandals and underperforming IPOs over the past decade have knocked investor confidence and highlighted regulatory oversight.
In 2021, China had a record-breaking number of IPOs. However, of the 39 that launched in the U.S., just 32 are still trading, according to data from the U.S.-China Economic and Security Review Commission. Today, shares in each of those companies trade for less than their launch value, with most down at least 90%, according to Quartz’s analysis.
Perhaps the most notable: Didi. The ride-hailing app listed in the U.S. despite concerns among China’s regulators. Shortly after the launch, an investigation found the company broke cybersecurity and data privacy laws. Chinese authorities fined the firm $1.2 billion, and it was delisted from the New York Stock Exchange (ICE+0.08%).
Door-to-door inspections
New measures under Qing include higher profitability thresholds for listing on main boards and the Growth Enterprise Market. Quotas for onsite inspections have risen from 5% to 20% of applicants. Plus, there’s been a tightening of rules relating to revenue sources and business sustainability.
As part of the enhanced scrutiny, officials have reportedly shown up at an IPO applicant’s office, sources told Asia Financial. Personal bank data was scanned and business transactions probed, sources said.