Klarna files for US IPO, marking potential over £12bn fintech listing

Swedish fintech giant Klarna has initiated its much-anticipated journey toward a public listing, confidentially submitting draft registration documents to the US Securities and Exchange Commission (SEC) for an initial public offering (IPO).

The buy now, pay later (BNPL) pioneer’s potential flotation could value the company between £12 billion and £16 billion, marking a significant recovery from its £5.3 billion valuation in 2022, though still well below its peak £36.5 billion valuation in 2021 during the height of the tech boom.

The Stockholm-based company, which serves approximately 85 million active consumers across more than 575,000 merchants in 26 countries, has shown strong signs of financial recovery in 2023. Recent figures reveal a first-half adjusted profit of 673 million Swedish crowns (£49 million), contrasting sharply with a 456 million crown loss in the previous year. Revenue grew 27% to 13.3 billion crowns, bolstered by particularly strong US performance, where growth reached 38%.

Chief Executive Sebastian Siemiatkowski has orchestrated a significant operational transformation, leveraging artificial intelligence to streamline operations and reduce the workforce from 7,000 to approximately 3,800 employees. This strategic pivot has helped narrow losses and position the company for a potential return to annual profitability.

The timing of the IPO announcement follows recent boardroom tensions, with shareholders voting to remove board member Mikael Walther after clashes with Chairman Mike Moritz and Siemiatkowski. The company has also made strategic moves to strengthen its position, including a deal to offload £30 billion worth of UK loans to hedge fund Elliott.

Klarna’s choice of a US listing over European exchanges follows in the footsteps of fellow Swedish tech giant Spotify, representing another setback for European capital markets. The decision comes as the BNPL sector faces increasing regulatory scrutiny, with the UK Labour government recently proposing regulation of the sector as consumer credit, while US authorities advocate for credit card-style oversight.

The final timing of the public offering will depend on SEC review and market conditions, with the company yet to determine the precise number of shares and price range. Investment bank Goldman Sachs is reportedly being considered as the lead underwriter for the listing.

Shareholder Chrysalis Investments‘ recent valuation update suggests an implied valuation of approximately £11.6 billion, indicating strong market interest despite the broader tech sector challenges and regulatory headwinds facing the BNPL industry.

For potential investors, Klarna’s IPO represents a significant test of market appetite for fintech companies, particularly those operating in the increasingly scrutinised BNPL sector. The company’s recent return to profitability and successful cost-cutting measures may help attract institutional investors, though regulatory developments will likely remain a key consideration in determining the offering’s success.

• Read more under:
• Central America
• Fintech