Buy now pay later Klarna moves again toward $20bn US float

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By Creative Media News

  • Klarna plans New York listing after UK holding company establishment
  • Shareholders to exchange Klarna Holding shares for Klarna Group plc
  • Klarna’s UK holding company move follows sector regulatory developments

Early next year, Klarna, which is establishing a new holding company in the United Kingdom, is focusing on a listing in New York.

Buy now, pay later (BNPL) finance behemoth Klarna has successfully surmounted a significant obstacle in its pursuit of a stock market listing, which could potentially fetch it $20 billion (£15.9 billion) in value.

Regulators and shareholders have supported the Stockholm-based consumer credit provider’s establishment of a holding company with a UK domicile.

Earlier this week, investors received notification that the certifications, part of the preparations for a significant initial public offering (IPO), would result in the exchange of their Klarna Holding shares for Klarna Group plc stock within the next ten business days.

Although sources with knowledge of the matter indicate that the first quarter of 2025, following the upcoming US presidential election, appears to be the most probable period during which it could occur, investment banks have not yet selected for a New York flotation.

Klarna was establishing a new holding company in the United Kingdom in preparation for a public share offering.

The organization, which has a global customer base exceeding 150 million and employs approximately 5,000 individuals, has been considering the transition for a considerable period of time.

Sebastian Siemiatkowski, its inventor and chief executive officer, predicted in January that the event would occur “imminently.”

According to sources from the previous year, the establishment of a holding company in Britain was indicative of the country’s legal, regulatory, and capital market standing.

However, its delisting in the United States will disappoint the London Stock Exchange, which had advocated for Klarna to go public in the United Kingdom.

In 2022, Klarna had to lower its valuation from $46 billion (£36.6 billion) to $6.7 billion (£5.3 billion) during a funding round. Previously, the company had attracted investment from SoftBank’s Vision Fund, Sequoia Capital, and Mubadala, the sovereign wealth fund of Abu Dhabi.

On the basis of a comparison with its New York-listed peer Affirm Holdings, bankers estimate that Klarna’s initial public offering (IPO) value will range between $15 billion and $20 billion.0

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The reorganization of Klarna’s corporate structure follows the UK government’s apparent retreat from an assault on the BNPL sector.

In lieu of introducing fresh legislation to oversee service providers like Klarna, ministers intended to integrate forthcoming regulations into a revised Consumer Credit Act.

Consumer advocacy organizations reacted angrily to the government’s yet-to-be-announced decision.

In the fall of last year, the Financial Conduct Authority announced that it had secured contract modifications for BNPL clients in response to the product’s sudden surge in demand.

In the second half of 2023, 27% of adults, or approximately 14 million people, utilized BNPL at least once, according to research published by the City Watchdog.

Klarna has previously supported the industry’s “proportionate” regulation.

Klarna introduced what it termed the “first credit opt-out” product in the United Kingdom last year in an effort to empower customers with greater financial control.

The then-city minister, Andrew Griffith, reportedly proposed the idea during a meeting with Mr. Siemiatkowski.

A Klarna spokesperson stated, “In accordance with our prior year-end announcement, we informed investors yesterday that we have obtained the investor and regulatory approvals required to establish a new holding company based in the United Kingdom.”

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