The thrill of attracting a Gen Z listing, made famous by Tik Tok, to the moribund London stock market is too good to resist.
It is no surprise that Chancellor Jeremy Hunt has decided to roll out the red carpet for Asian fast fashion star Shein.
A successful IPO for the fashion colossus of between £40bn and £70bn would be a huge boost.
It could mark the end of the run of fugitives to New York, with life sciences group Indivior the latest company to propose crossing the Atlantic.
Shein may be based in Singapore, but for all intents and purposes it is a Chinese success story, sourcing its cotton there, promoting its products on Beijing-controlled Tik Tok and using the best of the country’s online technology.
Talks: Chancellor Jeremy Hunt has decided to roll out the red carpet to try to attract Asian fast fashion star Shein to a London listing.
Nasdaq is generally considered the best place for technology companies and Shein, backed by Silicon Valley’s Sequoia, appears to be right up there.
But the current chill in Sino-US relations is getting in the way. U.S. authorities are demanding the kind of disclosures about ownership, sourcing and other proprietary details that Shein founder Chris Xu finds uncomfortable.
That’s before the anti-Beijing right-wing forces on Capitol Hill start stirring up a storm. The possibility of floating in Hong Kong or Singapore is still there.
Being so close to the homeland can be uncomfortable. London looks as good as anywhere else as it still attracts global players.
Kazakh airline Air Astana is the latest to get on board, with London Stock Exchange and City regulators racing to liberalize the listing regime.
Plus, Europe is the home of fast fashion. The FTSE houses Primark, under the rubric of Associated British Foods, and there are close comparators such as the Swedish H&M and the Spanish Inditex, owner of Zara.
The City also has its own online fashion champion in Next and newcomers Asos and Boohoo, although the latter is not having its best moment.
Before the UK gets too passionate about Shein, we should think about the potential pitfalls. Valuing the company, which was given a heady price in its last fundraising, will be difficult.
After all, fast fashion can be a volatile business, as former “king of the high street,” Philip Green, learned firsthand.
Equally serious are the security implications. Shein is not in the same category as the partly Chinese-funded Hinkley nuclear power plant.
But there are those on the Conservative benches, such as former leader Sir Iain Duncan Smith, who have deep reservations about any Beijing involvement in the UK.
Even if all the systems that have made Shein a star are based in Singapore, the possibilities of database misuse affecting the UK must exist.
What would happen if, in the worst case scenario, tensions in the South China Sea erupted? Or Xi Jinping, following Vladimir Putin’s lead in Ukraine, decided it was time to show determination and invade Taiwan.
Western sanctions would undoubtedly follow and, if Russia offers any guidance, companies listed on the London market could be delisted and their assets frozen.
Not all that glitters is gold.
Save our curries
Elliott Advisers’ siege on electronics retailer Currys continues with an improved offer of 67p per share, or £757m.
The group’s board is rightly holding its ground, but as we have seen in previous raids on FTSE companies, when faced with an offer at the right price, it is difficult to resist.
What investors need to keep in mind is that companies in the UK market trade at a steep discount, of 30 per cent or more, to their New York counterparts.
Furthermore, if the buyer is paying in dollars, the pound’s relatively low valuation today means this is bargain territory. It is assumed that 80 p would be enough and the resistance would decrease.
It would be great if chairman Ian Dyson recognized that Currys has a decent British heritage, is important to our shopping centres, a promising Scandinavian footprint and is not prepared to give up.
Security bar
It’s good to see Chancellor Jeremy Hunt reiterate his commitment to making Britain an AI powerhouse in a pre-Budget meeting with tech and leaders at No 11.
It needs to recognize that the recent UK White Paper on AI, which allows Silicon Valley giants to draw their own security boundaries, risks stifling the principle of open AI.
This is essential for Britain to be truly successful.
Some links in this article may be affiliate links. If you click on them, we may earn a small commission. That helps us fund This Is Money and keep it free to use. We do not write articles to promote products. We do not allow any commercial relationship to affect our editorial independence.
