(Bloomberg) — Klarna Group Plc filed publicly for a US IPO in what could be one of the year’s biggest financial company listings.
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The Stockholm-founded digital payments company’s revenue climbed 24% last year. Klarna had net income of $21 million on revenue of $2.81 billion for 2024, compared with net loss of $244 million on revenue of $2.28 billion a year earlier, according to its filing Friday with the US Securities and Exchange Commission. Klarna filed confidentially for the initial public offering in November.
Klarna is seeking to raise at least $1 billion in the IPO and is targeting a valuation of more than $15 billion in the listing, Bloomberg News reported. The company and some of its shareholders are selling shares in the offering, the filing shows.
The listing comes as Wall Street weighs up the potential impact of recent market swings on a group of large companies seeking to list in the US, including AI cloud computing provider CoreWeave Inc. and medical supplies maker Medline Inc.
Led by Co-Founder and Chief Executive Officer Sebastian Siemiatkowski, Klarna offers consumers so-called buy now, pay later financing, a type of lending that took off at the start of the decade and further accelerated during the coronavirus pandemic with the explosion of online shopping.
Analysts pegged the company’s valuation in October at about $14.6 billion. That’s an improvement from the $6.7 billion value it achieved in a 2022 private funding round, but a far cry from the $45.6 billion valuation it had in 2021 during the height of the fintech boom. The firm has privately raised $4.8 billion in capital, according to PitchBook data.
Klarna has 93 million active consumers and works with more than 675,000 merchants, the filing shows.
Refocusing Year
Klarna spent much of the past year refocusing ahead of the planned IPO — setting up a new British holding company, shedding businesses, focusing on payment partners and investing in artificial intelligence. The company agreed in June to divest its Checkout payments business for about $520 million, and in August snapped up the assets of New Zealand’s Laybuy.
Klarna has bolstered its relationships with tech stalwarts, announcing in November it would offer buy-now, pay-later credit to US shoppers using Google Pay just a month after sealing a partnership with Apple Inc. The Swedish firm has also struck deals with Adyen NV, Xero Ltd. and Worldpay Inc. as it looks for growth via mainstream payment processors.
The company is in talks with banks and a payment network about partnering on new products and services, the filing shows. The fintech noted it has long relied on Visa Inc. and WebBank for its credit card and lending products.
“We are currently in advanced stages of establishing business relationships with a second bank partner in the United States, through which we expect to offer our Fair Financing products in that market, and with a second payment network, on which we plan to issue the Klarna card in select markets,” Klarna said in the filing. “We expect that, as a result of these negotiations, we will enter into a binding agreement with the relevant partner in the first quarter and second half of 2025, respectively.”
JPMorgan Chase & Co.’s payments processing unit is partnering with Klarna to expand buy now, pay later options for its merchants, the company announced in February. It will provide about 900,000 businesses the ability to offer Klarna’s fast-credit options to their customers.
The company also said in the filing that it has a tie-up with Milkywire AB, an environmental platform founded by Siemiatkowski’s wife. Klarna has paid Milkywire $2.6 million for services since 2022.
Largest Investors
Klarna’s largest investors with 5% or more of the outstanding shares include entities affiliated with Sequoia Capital, which beneficially own 78.8 million shares ahead of the offering, the filing shows. Heartland A/S, an investment vehicle for the family behind clothes retailer Bestseller, has 37.1 million shares, and co-founder Victor Jacobsson has 31.4 million shares.
The IPO filing follows a period of tumult at the firm that’s seen a boardroom battle and, most recently, the ouster of a board member, Mikael Walther, who had repeatedly clashed with Chairman Michael Moritz.
In the filing, Klarna reported that it discovered a material weakness within its financial controls in 2022 tied to the IT systems it uses to prepare financial statements. While the company has developed a remediation plan for the issue, it still hadn’t been resolved as of the end of last year, Klarna warned.
Separately, Klarna also told potential investors that it’s facing an investigation from the Swedish Consumer Agency tied to the company’s compliance with marketing laws in the country.
Before the IPO offering is completed, Klarna plans to adopt a new policy governing its related party transactions, the company vowed. The new rules will require certain transactions to be vetted and approved by the company’s board.
The offering is being led by Goldman Sachs Group Inc., JPMorgan and Morgan Stanley and lists 11 other firms working on the deal, the filing shows. Klarna plans to list on the New York Stock Exchange under the symbol KLAR.
—With assistance from Katie Roof.
(Updates with filing details from tenth paragraph.)
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