CashNews.co
Unlock the Editor’s Digest for free
Roula Khalaf, Editor of the FT, selects her favourite stories in this weekly newsletter.
Klarna has begun its long-anticipated stock market flotation after the Swedish buy now, pay later pioneer said it had filed initial public offering documents in the US.
The fintech said on Wednesday that it had “confidentially submitted” a draft registration statement to the US Securities and Exchange Commission.
The initial public offering, which could value Klarna between $15bn and $20bn, would take place after the SEC review and the timing would be subject to market conditions, the company added. Klarna said the price range and number of shares to be offered in the IPO were still to be determined.
Klarna has been on a rollercoaster ride since it was valued at $46bn in a 2021 deal that made it Europe’s most valuable start-up. It was then valued at $6.7bn during its last official fundraising round in 2022, as investors sharply re-rated fintech companies in response to rising interest rates.
It has also suffered from a deep governance rift between two of its co-founders — chief executive Sebastian Siemiatkowski and its third-largest shareholder Victor Jacobsson — that culminated last month in the latter’s representative being ousted from Klarna’s board.
The dispute exposed tensions around Jacobsson and his ally’s use of special purpose vehicles to buy shares in the company on the secondary market and oppose its leadership.
Siemiatkowski told the Financial Times more than a year ago that it was ready for an IPO when market conditions allowed. Although widely anticipated, Klarna’s choice of the US for its IPO is a blow for Europe’s capital markets, and follows a similar decision from compatriot Spotify to choose New York for its listing in 2018.
The fintech has focused heavily on US expansion in recent years, which has weighed on its profits. It has increased partnerships with merchants in the US as it tries to take on buy-now, pay later rival Affirm, and has struck a deal to offload £30bn worth of its UK loans to hedge fund Elliott to bolster its capital.
Klarna has narrowed its losses over the past year, and appears on track to return to annual profitability. Siemiatkowski has touted the benefits of using artificial intelligence to cut costs, pledging to nearly halve its workforce by using AI for customer service and marketing. He also implemented a hiring freeze on workers apart from engineers.
An IPO by Klarna is likely to bring further scrutiny of the controversial buy now, pay later sector. Siemiatkowski has pitched it as a business that offers customers far lower fees than credit cards, but consumer groups and charities have criticised the sector for encouraging people to take on extra debt that they cannot afford.
The UK Labour government last month launched plans to regulate the sector as consumer credit while the US Consumer Financial Protection Bureau said earlier this year that BNPL should be regulated like credit cards.