Klarna aims for $20 billion US IPO amidst revival plans

The Stockholm-based buy-now-pay-later fintech, Klarna, is reportedly making preparations for a potential US Initial Public Offering (IPO) this year, according to industry sources.

Recently, Klarna has initiated in-depth talks with leading investment banks to oversee the IPO process, potentially targeting a valuation of $20 billion.

Shifting Market Conditions and Revival Plans

Established in 2005, Klarna provides credit solutions to approximately 150 million consumers worldwide, facilitating the distribution of online purchase costs over several weeks. The company processes about 2 million transactions daily across 45 countries, as indicated by the information on its website.

Following a period of instability marked by conflicts among its investors and a drop in valuation, this potential $20 billion IPO could serve as a turning point for the business.

Amidst turmoil, Sequoia Capital, a key investor in Klarna, found itself entangled in a contentious boardroom clash stemming from disagreements among its co-founders. Initially, Sequoia demanded the departure of the company’s chairman, Michael Moritz. However, in a swift turn of events, the venture capital entity opted to substitute its representative on the board, retracting its previous stance.

Klarna’s staggering $45.6 billion valuation from 2021 fell to $6.7 billion in the following year due to rising interest rates and investor reconsideration of online lending platforms.

Strong US Market Presence

In a January interview with BNN Bloomberg, Sebastian Siemiatkowski, CEO, indicated a forthcoming US IPO for Klarna, highlighting the US as its top revenue-generating market with a customer base exceeding 37 million. This announcement followed Klarna’s transition to profitability after a nearly four-year period of financial losses, achieving its first profitable quarter. Notably, Klarna has sustained profitability in the US across four successive quarters.

There has been ongoing speculation about Klarna potentially listing in the UK or Sweden. This speculation was fueled in November when the buy-now-pay-later company established a new UK holding company, a move interpreted as laying the groundwork for a future public offering.