Klarna, the BNPL behemoth, readies for a mega IPO as it forms a UK holding company, aiming to reach a staggering $15 billion valuation. The countdown begins!
Are you ready for the financial world’s next big bang? Brace yourselves as Klarna, the colossal “Buy Now, Pay Later” (BNPL) finance giant, gears up for a jaw-dropping stock market debut that could skyrocket its valuation to over $15 billion (£12.1 billion)! The Stockholm-based consumer credit provider has set the wheels in motion by establishing a new British holding company, paving the way for its upcoming IPO, expected to hit the market as early as the first half of next year.
Klarna’s founder and CEO, Sebastian Siemiatkowski, emphasized the fulfillment of three pivotal conditions for the IPO – solidifying its presence in the US, securing a sustainable business model, and boasting substantial growth potential. Sources reveal that if market conditions remain favorable, Klarna, with approximately 5,000 employees and a vast customer base of 150 million globally, could make its stock market debut within the coming months.
With third-quarter results just around the corner, insiders anticipate further progress toward annual profitability. Klarna’s strategic restructuring to establish a new UK holding company reflects a keen focus on the legal, regulatory, and capital market aspects related to the UK.
Although the setup of the UK holding company has been initiated, it doesn’t necessarily lock Klarna into a London IPO. Many industry experts speculate that Klarna might prefer to list in New York, following in the footsteps of ARM Holdings, the renowned chip designer, dealing a blow to London’s status in the financial world.
In response to these exciting developments, a Klarna spokesperson stated, “We have initiated a process for a legal entity restructuring to set up a UK holding company as an important early step on a journey towards an eventual IPO. This is an administrative change that has been in the works for over 12 months and does not affect anyone’s roles, nor Klarna’s Swedish operations.”
Klarna’s journey to the IPO stage has been eventful, including a dramatic reduction in valuation to $6.7 billion (£5.4 billion) during a funding round last year. Yet, Bankers estimate that Klarna’s IPO could command a valuation between $15 billion and $20 billion (£16.1 billion), similar to New York-listed peer Affirm Holdings.
The establishment of the UK holding company is on the horizon and is expected to gain shareholder approval shortly. Klarna’s corporate reorganization aligns with the UK government’s shift away from a stringent BNPL sector crackdown, as it focuses on implementing future rules within a reformed Consumer Credit Act.
This shift has drawn mixed reactions from consumers and industry insiders. Consumer campaign groups expressed their frustration, while it’s rumored that ministers are discussing voluntary measures with BNPL providers before implementing new legislation. Meanwhile, the Financial Conduct Authority has secured contract changes for BNPL customers, acknowledging the sector’s significant growth.
Klarna, a proponent of “proportionate” BNPL regulation, has advocated for informed and consumer-friendly rules that empower individuals to make sound financial decisions. With a groundbreaking “credit opt-out” product launched earlier this year, Klarna demonstrates its commitment to consumer well-being and control over their finances. This innovative approach highlights the company’s dedication to staying at the forefront of the BNPL revolution.
As Klarna takes the bold steps toward its IPO, the financial world awaits a historic event that could redefine the BNPL landscape and set new records in the stock market. Stay tuned for more updates on this blockbuster financial adventure!
