Klarna has established itself as a major player in the European payments industry, with a valuation of $6.7 billion.
Klarna, a renowned fintech startup based in Stockholm, Sweden, has embarked on a significant corporate restructuring by establishing a holding company in the United Kingdom, signifying its intentions for a potential Initial Public Offering (IPO).
Klarna and the Corporate Restructuring: Is IPO Close?
Klarna’s spokesperson confirmed to CNBC that the establishment of the holding company is part of a broader legal entity restructuring process. This move aims to enhance corporate governance and improve operational efficiency.
The UK, a major hub for financial activity and global business, serves as an advantageous location for such a corporate entity, offering a gateway to international markets. Preparations for this new holding company have been carried out in collaboration with some of Klarna’s largest shareholders, including Sequoia and Heartland.
While the establishment of the UK holding company is seen as a precursor to an IPO, Klarna has not yet made formal announcements regarding its public offering plans. According to the Klarna spokesperson, it is indeed “very early days” for such a move, and the company has no immediate plans to go public.
Additionally, Klarna has not decided where it would choose to list, meaning that setting up the new legal entity in the UK does not necessarily dictate the location for the IPO. This flexibility allows Klarna to consider various stock exchanges for its public debut.
Klarna’s spokesperson emphasized that the restructuring is primarily an administrative change and has been in development for over a year. He added that the transition will not affect the roles of its team members or its Swedish operations.
Klarna Holding will remain a regulated financial holding company under the direct supervision of the Swedish Financial Supervisory Authority (SFSA), maintaining its Swedish banking license.
Klarna’s Role in the BNPL Industry
Klarna has established itself as a major player in the European payments industry, with a valuation of $6.7 billion. Similar to fintech giants like PayPal Holdings Inc (NASDAQ: PYPL) and Stripe, Klarna provides online merchants with checkout functionality for their e-commerce platforms.
What sets Klarna apart is its emphasis on flexible payment plans, known as Buy Now, Pay Later (BNPL), which have resonated strongly with consumers looking for alternatives to traditional credit cards.
Klarna’s journey in the BNPL space has been eventful. At the height of the COVID-19 e-commerce surge, the company’s valuation soared to an impressive $46 billion, attracting SoftBank as an investor. However, its valuation has since plummeted by 85%, reflecting the adjustment of technology valuations after the pandemic-induced boom.
It is worth mentioning that Klarna has been working diligently to achieve profitability, reporting its first month of profit earlier this year for the first time since 2020. This shift towards profitability demonstrates the company’s commitment to achieving financial sustainability and long-term success.
Furthermore, Klarna’s investment in Artificial Intelligence (AI) products, including an AI image recognition tool for identifying products reflects its dedication to innovation and enhancing the shopping experience.