Klarna, Europe’s $6.7 Billion ‘Buy Now, Pay Later’ Giant, Begins Journey Toward IPO

Klarna, the popular “buy now, pay later” service from Sweden, is taking steps towards a potential stock market debut. They’ve set up a UK-based holding company, with the green light from major investors like Sequoia and Heartland. While Klarna isn’t rushing into an IPO just yet, this move sets the stage for one, and they haven’t chosen a stock exchange either. This UK entity gives them flexibility in that decision.

It’s important to note that this change won’t affect how the company operates or its people. Their spokesperson emphasized that Klarna Holding will remain regulated under the SFSA and still hold a Swedish banking license.

Klarna, valued at $6.7 billion, plays a big role in Europe’s payment scene. Similar to PayPal and Stripe, they help online stores offer easy checkouts. What makes them different is their “buy now, pay later” approach.

During the peak of the COVID-19 online shopping frenzy, Klarna’s value soared to $46 billion thanks to an investment from SoftBank. But when the tech boom cooled, their value dropped by 85%.

CNBC and Statista recognize Klarna as one of the top 200 fintech companies. They’ve gathered over $4 billion from investors, including Sequoia, Silver Lake, and China’s Ant Group.

The UK had plans for stricter rules on “buy now, pay later” services, including checks for affordability and transparent ads. These plans are now under review after major industry players voiced concerns about potential effects on their business.

Klarna and Clearpay’s owner, Block, had reservations about some aspects of these UK regulations, like an exemption for Amazon. Klarna has been striving to make a profit and reported its first profitable month since 2020 earlier this year.

Aside from their financial services, Klarna is diving into artificial intelligence. They’ve recently launched a tool that can identify products from images, such as jackets or headphones.

Over the weekend, Klarna also resolved a dispute with workers in Sweden, avoiding a potential strike. Klarna is committed to expanding and innovating while edging closer to the possibility of going public down the road.