FCA boss signals willingness to allow Shein IPO

The Financial Conduct Authority has signalled it would be potentially willing to green light Chinese retailer Shein’s London £50bn debut, it was reported on Tuesday.

In an interview with the Financial Times, FCA chief executive Nikhil Rathi said companies were admitted to the London Stock Exchange based on their disclosures and not "every aspect of their corporate behaviour".

He noted it was "not unusual" for UK-listed companies to carry risks, adding: "What’s important is that they disclose it, the investors understand it and they can price that risk."

Reports that Shein, which has significant manufacturing operations in China, wanted to list on the London market first emerged in the summer.

It has become one of the world’s biggest online fashion retailers in recent years and would likely be valued at around £50bn should the initial public offering go ahead.

But it has also faced widespread criticism for the environmental impact of its fast fashion as well as alleged human rights abuses in its supply chain, including using forced labour in China. Shein denies all allegations against it.

As result, the regulator has come under pressure to block any potential listing.

But while Rathi declined to comment specifically on Shein - which is reported to have filed listing confidential documents with the FCA - he said: "What parliament has not asked us to do is to be a broad regulator around every aspect of corporate behaviour and every company listed in the UK everywhere around the world."

He pointed to global mining companies, many of which are listed in London but "find themselves facing legal difficulties in many different parts of the world".

Kathleen Brooks, research director at XTB, said: "This suggests a sea change at the FCA, as it will allow investors to make up their own minds about the legal risks that face Shein.

"If Shein does list in London, then its £50bn valuation would make it the most valuable company on the UK index and the largest IPO in the UK. London is in desperate need for a mega IPO to rival that of New York."

Rathi ran the LSE prior to taking up his role at the FCA four years ago.