Klarna Targets $1.27 Billion in US IPO

Klarna, the Swedish fintech giant synonymous with the “buy now, pay later” (BNPL) revolution, is gearing up for its highly anticipated IPO, potentially raising up to $1.27 billion. The move is backed by significant stakeholders offering a substantial portion of their holdings, signaling confidence in the company’s future despite recent market volatility.

The company plans to float 34,311,274 ordinary shares, priced in the range of $35 to $37 each. CNBC calculations reveal that this pricing could give Klarna a valuation of up to $14 billion, a figure that will be closely watched by analysts and investors alike.

Klarna confirmed it will list its shares on the New York Stock Exchange under the ticker symbol “KLAR,” marking a significant milestone for the European fintech industry.

Of the total shares to be offered, Klarna itself will be issuing 5.56 million, while the remaining approximately 28.8 million will be put on the market by existing shareholders eager to capitalize on the listing. The ratio suggests a strategic realignment within the company’s ownership structure as it enters the public market.

The IPO is being orchestrated by a trio of Wall Street heavyweights: Goldman Sachs, JP Morgan, and Morgan Stanley, who are acting as joint bookrunners. Their involvement lends further weight to the offering and underscores the level of institutional interest in Klarna’s market debut.

Founded in 2005, Klarna disrupted the traditional credit landscape with its BNPL model, allowing consumers to split purchases into manageable installments. However, the company has ambitions beyond installment payments and is actively diversifying its product portfolio, moving into areas such as debit cards and deposit accounts, seeking to evolve into a comprehensive financial “super app.”

A recent filing with the Securities and Exchange Commission (SEC) provided a glimpse into Klarna’s financial performance. For the June quarter, revenue jumped 20% year-over-year to $823 million, indicating robust growth. However, the company reported a net loss of $53 million, a widening from the same period last year. The mixed financial picture presents both opportunities and challenges for prospective investors.

Klarna initially intended to launch its IPO earlier in the year but put those plans on temporary hold. This decision was reportedly influenced by broader macroeconomic uncertainties, including concerns surrounding potential trade tensions.

Once riding high with a valuation of $45.6 billion in a SoftBank-led funding round in June 2021, Klarna subsequently experienced a significant correction, with its valuation plummeting as much as 85% to $6.7 billion in 2022. The company attributed this massive decrease to deteriorating macroeconomic conditions stemming from geopolitical instability.