Fintech startup Klarna is valued at $10.65 billion in new funding

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Klarna AB, a Swedish payment provider for online shoppers, is still setting its sights on an initial public offering even after its latest funding round left it roughly twice as valuable as it was a year ago.

“Over time, with the amount of shareholders we have, it’s probably going to be the natural evolution,” Chief Executive Sebastian Siemiatkowski said in an interview Tuesday.

He spoke after Klarna brought in $650 million in equity funding from a group of investors led by Silver Lake. Singapore’s sovereign wealth fund GIC, BlackRock Inc. and HMI Capital also participated, as did Merian Chrysalis, TCV, Northzone and Bonnier. The funding round gives Klarna a valuation of $10.65 billion, it said.

The company has achieved enormous popularity, especially in the U.S., thanks to its buy-now-pay-later service. Klarna has hinted at its intention to do an IPO in the past, suggesting in December that a timeline of one to two years seemed reasonable.

Siemiatkowski said Klarna tries to be “less dependent” on the macroeconomic environment, “and more [on] when we think it makes sense for the company and the right timing for us.”

He described the latest funding round as “a great opportunity to continue building a great offering for our consumers.” Klarna now wants to expand in Europe, with France identified as an important market, he said.

Klarna’s other backers include Permira Holdings, Sequoia Capital and the rapper Snoop Dogg, who stars in the company’s commercials encouraging users to “get smoooth.”

Klarna’s success in the online payments market has turned it into a key challenger to firms like PayPal Holdings Inc. and Square Inc. The Swedish firm’s customers can delay payments or make interest-free installments when they shop from brands like H&M or Adidas. Retailers pay Klarna a cut of purchases. Klarna’s shopping app also alerts shoppers to deals or price-drops.

But the Swedish firm has faced regulatory pressure, amid concern its marketing tactic of buy-now-pay-later encourages reckless spending, especially among young people. Earlier in September, the U.K.’s Advertising Standards Authority launched a probe into Klarna’s marketing practices.

Klarna says demand for its services from both retailers and consumers has soared during the pandemic. The company says it added around 200 new retailers per day in the first half of the year, but has still set aside a reserve of cash to act as a buffer given the economic climate.

A Klarna listing would take place in the U.S., where its business is growing fast, according to the CEO. Almost 9 million consumers there have used the company’s services.

Bloomberg News
Digital payments Credit