Klarna eyes US IPO as valuation targets $20 billion

Klarna Bank AB, a Swedish fintech and previously Europe’s most highly valued startup, is advancing with plans for a potential U.S. listing, which could become one of the most significant listings of the year.

Sources familiar with the matter told Bloomberg that the Stockholm-based buy-now-pay-later (BNPL) provider has kicked off detailed talks with investment banks. Klarna is eyeing an initial public offering (IPO) that could materialize as soon as this year’s third quarter. The company is reportedly aiming for a valuation of roughly $20 billion.

The company has chosen not to comment on these developments. This move toward a listing marks a pivotal moment for Klarna, seeking to overcome recent challenges, including internal conflicts among its backers and a significant reduction from its peak valuation during the pandemic era.

Klarna’s valuation soared to an impressive $45.6 billion in 2021 before plummeting to $6.7 billion in 2022, amid a reevaluation by investors due to the impact of rising interest rates on online lending platforms.

The U.S. represents Klarna’s largest market in terms of revenue, boasting over 37 million customers. CEO Sebastian Siemiatkowski hinted at the likelihood of a U.S. IPO occurring “quite soon”, especially after the company reported its first profitable quarter overall after nearly four years of losses, including four consecutive profitable quarters in the U.S.

While there has been speculation about Klarna potentially listing in the UK or Sweden, the company’s establishment of a new UK holding company in November was perceived as groundwork for a future IPO.

Established in 2005, Klarna provides credit to approximately 150 million global shoppers, facilitating the spread of online purchase costs over several weeks. The company processes about 2 million transactions daily across 45 countries.

The company has been in the headlines not just for its financial performance but also for internal drama, such as the high-profile boardroom scuffle involving major investor Sequoia Capital. The dispute, which initially targeted the resignation of Klarna’s chairman, Michael Moritz, took a sharp turn with Sequoia opting to change its board representative instead.

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