Klarna Rival Zilch Secures $127 Million in Pre-IPO Push, Contemplates Overseas Listing if London Market Stagnates

In a significant stride towards its initial public offering (IPO) next year, British fintech innovator Zilch Technology Ltd. has successfully raised £100 million ($127 million) through a securitized debt financing deal orchestrated by Deutsche Bank AG. This funding round marks a pivotal moment for Zilch as it seeks to expand its reach and solidify its market position in the competitive buy-now-pay-later (BNPL) sector.

Expansion and Innovation

The freshly secured funds are set to fuel Zilch’s ambitious expansion plans. According to a company statement released on Wednesday, the capital infusion will enable the development of new products designed to cater to a broader customer base. Co-founder and CEO Philip Belamant highlighted the strategic significance of this deal during an interview with Bloomberg Television.

“This deal means growth,” Belamant stated emphatically. “This allows us to triple the commerce we can send to our retail partner network, which is phenomenal.” He further elaborated that the financing will expedite the rollout of Zilch’s product roadmap, enhance its market share, and ultimately steer the company toward its IPO target.

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Robust Market Presence

Zilch, headquartered in London, currently boasts a substantial user base exceeding 4 million customers and processes over 10 million payments monthly. The company achieved a valuation of $2 billion during its Series C funding round in 2022, underscoring its robust market presence and growth potential.

In a recent update, Belamant expressed optimism about Zilch nearing profitability, with sights set on an IPO in the upcoming year. The company is exploring listing opportunities with prominent exchanges, including Nasdaq, the New York Stock Exchange, and the London Stock Exchange. Despite keeping options open for the IPO venue, Belamant underscored the need for capital markets to rebound, particularly in the UK.

Challenging IPO Climate in the UK

“The capital has to move back to IPOs,” Belamant remarked, pointing out the current challenges in the UK market. “In the UK specifically, we know we need to change things. We need liquidity in the market — we have to have that. We need perception to change around the LSE.”

The UK’s appeal as a listing destination has notably diminished in recent years, with companies often seeking more favorable valuations abroad. Data compiled by Bloomberg reveals that of the $11.9 billion raised through IPOs in Europe this year, a mere 2% originated in the UK — a historic low. This trend reflects a broader skepticism about the London Stock Exchange’s ability to attract substantial IPOs amid current market conditions.

Looking Ahead

As Zilch prepares for its IPO, the company’s strategic decisions in the coming months will be closely watched. Whether it opts for a listing in London or seeks opportunities across the Atlantic will depend significantly on market developments and the perceived advantages of each location. In the meantime, the recent funding round stands as a testament to Zilch’s growth trajectory and its potential to reshape the BNPL landscape.

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