Shein will miss out on a place on London’s FTSE 100 as the soon-to-list fashion retailer will not sell enough shares to qualify.
Companies need to have a minimum free float of 25% to be included in the FTSE index, and city sources told The Sunday Times that the fast fashion behemoth will not sell enough shares.
The fashion giant, which was valued at $66bn (£52bn) in its latest round of fundraising, was on track to have become one of the ten largest companies in the FTSE 100 when it floats.
It is expected to raise more than £1bn from the sale of new shares, but a source told the newspaper that Shein’s co-founder Sky Xu, who is thought to own about a third of the company’s shares, does not intend to sell down his stake.
Shein is set to file the prospectus for its London IPO with the Financial Conduct Authority this month, Sky News reported, with the flotation unlike to happen until the autumn.
The Singaporean-based fast fashion retailer is understood to have chosen London for its IPO after it faced political pushback from New York.
The controversial firm has faced criticism from many directions, including from politicians and fund managers, over its business practices and opaque supply chain.
In 2022, a Channel 4 undercover investigation into factories supplying Shein showed that factory workers were working up to 18 hours a day including at weekends, and had just one day off per month, while being paid 3p per garment..
The British Fashion Council (BFC) is the latest industry body to speak out about its planned £50bn London flotation, which it deemed a “significant concern” to the fashion sector.
BFC chief executive Caroline Rush told This Is Money: ‘At a time when global fashion leaders are rightly focused on making our sector more socially, environmentally, and economically sustainable, the Government’s courting of Shein to list on the London Stock Exchange, and Shein’s decision to do so, is of significant concern to UK fashion designers and retailers.
‘Whilst we appreciate that Shein has committed to meeting acceptable industry standards, questions remain about the ethicality and sustainability of a business model and supply chain that consistently undercuts British designers and retailers, and these still need to be answered.’
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A Shein spokesman told the publication: “Shein is investing millions of pounds in strengthening governance and compliance across our supply chain.”
They highlighted that regular supplier audits showed a “consistent improvement in performance and compliance” including making sure workers are paid ‘fairly’
It comes as investors put the business model of the controversial fashion retailer under the microscope.
Independent researcher The Analyst warned clients that there was a risk that Shein’s “unfair” tax advantages could get regulated, according to The Sunday Times. Currently, the retailer avoids import duties by sending individually packaged orders directly from Chinese warehouses to shoppers’ homes.
The Analyst warned this could have a “material” negative impact on Shein’s sales and profits. The fast fashion giant’s profits more than doubled to $2bn on sales of $45bn last year.
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