Klarna eyes IPO in U.S. expansion

Swedish payment provider Klarna Bank AB is preparing for a potential initial public offering in the next one or two years as the most valuable European fintech startup expands rapidly in the U.S.

“An IPO would most likely be happening in the U.S. because there is a bigger understanding of technology companies like us and because the U.S. might be our biggest market in one or two years,” Chief Executive Officer Sebastian Siemiatkowski said in an interview in Berlin.

The company may raise more capital in another private funding round before tapping the stock market and is searching for acquisitions to help it grow, Siemiatkowski said. The company is nearing a deal in Europe and closed a transaction two weeks ago in the U.S., he said, declining to name the targets. The firm’s biggest acquisition so far was German payment provider Sofort, which it agreed to buy for $150 million in 2013.

An August funding round made Klarna Europe’s most highly valued fintech startup with a $5.5 billion price tag, propelling it above TransferWise and N26, which each have been pegged at $3.5 billion. Backers include Permira Holdings, BlackRock Inc., Sequoia Capital and rapper Snoop Dogg, who stars in the company’s commercials urging users to “get smoooth.”

Klarna helps online shoppers arrange financing at points of purchase with a few clicks and provides merchants with payment tools, challenging the likes of PayPal Holdings Inc. and Square Inc.

Siemiatkowski expects Klarna to finish the year with a net loss due to heavy investments in the U.S. where it’s adding six million customers annually. Expansion into Asia isn’t on the table for now because of strong competition in that region, he said.

Germany is still the company’s biggest market, ahead of the U.S. and the U.K., Siemiatkowski said. Klarna plans to double its workforce in Berlin to 500 people as it adds employees in areas such as engineering and marketing.

Bloomberg News