The boss of the London Stock Exchange Group has denied lowering standards in order to lure the fast-fashion retailer Shein’s £50bn IPO to London, as he hailed a stronger pipeline for UK listings.
Shein, which operates largely from China but is headquartered in Singapore, has come under fire from workers’ rights campaigners concerned about a lack of transparency regarding its supply chain and allegations its suppliers have used the forced labour of Uyghurs in China’s Xinjiang region.
The company’s original plans to list in New York were scuppered after US lawmakers raised concerns over alleged labour malpractices and lawsuits from competitors. However, Shein has yet to face formal opposition in the UK. The retailer reportedly filed papers to float on the London Stock Exchange in June, and secured support for a potential UK IPO from the Labour party weeks before the July election.
But London Stock Exchange Group (LSEG) chief executive, David Schwimmer, denied any suggestion that the bourse was lowering standards in order to lure Shein’s £50bn listing to the UK.
He said: “To be clear, there is no lowering of standards on the London Stock Exchange. The listing approval process goes through the UK listing authority and to the extent that companies meet the requirements – and these are about disclosure around governance etc – of the UK listing authority, then they are able to list on the London Stock Exchange and take advantage of the governance regime and disclosure regime that we have.
“We have found that tends to be very good for companies in terms of having the disclosure and the scrutiny and the investor participating in how they are managed.”
In May, an investigation by the Switzerland-based non-profit group Public Eye found that workers producing garments for Shein routinely worked more than 70-hour weeks, while other exposés have alleged that suppliers have used forced labour in the Xinjiang region. Meanwhile, the company’s alleged “cavalier approach to design appropriation”, has led to a string of lawsuits relating to allegedly copied garments.
Schwimmer said there was an “encouraging listing pipeline” and that the prospect for further share flotations was “looking up, certainly here in the UK”.
He told reporters on Thursday: “As you can see, a number of companies have made some indications that they are coming to this market. So I feel pretty good about the pipeline and the direction of travel.
“That’s due to a combination of factors. I think it is resolution of the [UK general] election, I think it is probably the improving macroeconomic environment, I think it is also due to the capital markets reforms.”
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The UK regulator loosened rules for listed companies earlier this week, as part of capital market changes that officials hope will end the exodus of companies from the London Stock Exchange to rival financial hubs. The shake-up included scrapping rules that forced companies to hold shareholder votes before approving large mergers or takeovers. While many have welcomed the changes, critics fear an erosion of shareholder democracy.
The fast-fashion retailer has said: “Shein has a zero-tolerance policy for forced labour and we are committed to respecting human rights. We take visibility across our entire supply chain seriously and we require our contract manufacturers to only source cotton from approved regions.”