Klarna gears up for US IPO, eyes blockbuster debut with potential $20bn valuation

Klarna, the buy-now pay-later (BNPL) behemoth, has initiated the process for a highly anticipated stock market debut in the US by confidentially filing for an initial public offering (IPO).

The Swedish fintech firm discreetly lodged the necessary documents with the Securities and Exchange Commission (SEC), as confirmed last night, as reported by City AM.

While Klarna has not disclosed the number of shares or the price range for its forthcoming IPO, it remains tight-lipped about the valuation it aims to achieve.

Earlier this year, reports surfaced that Klarna was discussing a New York IPO with banks, eyeing a valuation of $20bn.

In a recent development, shareholder Chrysalis revalued its stake in the fintech company, leading Deutsche Bank analysts to suggest an implied valuation of approximately $14.6bn for Klarna.

This figure marks a substantial increase from Klarna's last known valuation of $6.7bn during a 2022 funding round, yet it falls short of the staggering $45.6bn valuation from 2021.

Established in Stockholm in 2005, Klarna provides a suite of payment options to some 85m active users and over 575,000 merchants worldwide, standing as the UK's largest BNPL service by offering interest-free instalment loans at the point of sale.

As one of Europe's most prized private technology companies, the market has been eagerly awaiting Klarna's IPO. CEO Sebastian Siemiatkowski hinted in August that a 2025 flotation "sounds reasonable", although he mentioned that the company had not set a definitive date.

Hints were dropped that Klarna is leaning towards a US listing, but it was also revealed that some European options had been considered.

Klarna announced that its IPO is anticipated to occur after the SEC completes its review process, subject to market and other conditions.

This news follows closely on the heels of last month's decision by Klarna's shareholders to remove Mikael Walther from the company's board of directors, following a disagreement with chair Mike Moritz and CEO Sebastian Siemiatkowski.

Klarna has not posted an annual profit since 2018 when it began its aggressive expansion into the profitable US market. However, the company has seen improvements in its bottom line this year, swinging to an adjusted profit in the first half of 2024.