Klarna becomes most valuable fintech with $5.5bn valuation
Swedish payments company raises new money ahead of IPO
Klarna has become the largest private fintech start-up in Europe after a new funding round valued the Swedish payments group at $5.5bn ahead of a potential stock market flotation.
The Swedish “buy now and pay later” company raised $460m in equity from investors including Silicon Valley venture capital company Dragoneer, the Commonwealth Bank of Australia, and funds managed by the world’s largest asset management group BlackRock.
Klarna’s valuation has risen from $2.5bn at the start of this year to $3.5bn in April when existing shareholders such as Hennes & Mauritz, Sequoia Capital and Permira invested fresh equity to today’s post-money valuation of $5.5bn, ranking it as the eighth most valuable private fintech globally.
Sebastian Siemiatkowski, Klarna’s chief executive, said that the Swedish group was edging closer to an IPO.
“At this point of time, it’s more likely than it has been previously. I definitely think it will happen. But it’s not like there’s a formal decision. Right now the whole company is just focused on making sure we are growing fast,” he added.
Asked if Klarna is ready for an IPO, he replied: “In many ways, we have most of the things in place that we need. It’s more of a question of timing and focus. We have such high growth in the US. An IPO is a lot of work.”
Klarna is the latest in a series of Swedish tech success stories that include the music streaming company Spotify to gaming groups King and Mojang. Stockholm has produced more billion-dollar “unicorn” companies than any other region behind Silicon Valley.
Founded in 2005 by a trio of business school friends, Klarna took the idea of customers only paying when they received an invoice and applied it to online shopping.
It now processes $29bn of transactions for merchants such as Asos and Ikea, earning fees from them as well as interest from customers who pay late. Last year, it made an operating profit of $19m on revenues of $627m.
Mr Siemiatkowski said the new money would help it expand in the US, where it is growing at the rate of 6m users ayear. “We have just seen massive traction in the US market. We have super high growth, both among merchants and consumers. This is a massive market opportunity.”
Klarna was one of the first large European fintechs to gain a banking licence in 2017 and has started offering its own payment card. Its shareholders are as diverse as Visa, fashion group Bestseller, and rapper Snoop Dogg.
As part of the fundraising announced on Tuesday, Klarna will also enter Australia and New Zealand in partnership with CBA. “Retail is becoming global. Even the smallest companies are selling to multiple geographies. The more markets we cover the better,” said Mr Siemiatkowski.
UK-listed broker Numis advised Klarna on the fundraising.