Klarna, a buy now, pay later firm, is undertaking a legal restructuring to form a UK-based holding company in advance of a potential IPO. A spokesperson for the firm mentioned that Klarna plans to be listed are not imminent, and the formation of the UK-based entity does not solely point to a listing there. The last funding round for Klarna saw them valued at a more conservative $6.7 billion, a significant decrease compared to the previously calculated $46 billion.
Klarna, the Swedish firm that facilitates "buy now, pay later" transactions, has taken a symbolic step toward a possible eventual public listing by setting up a holding company in the U.K. A spokesperson confirmed to CNBC that the business has commenced a legal entity restructuring to establish the holding company, with preparations having been approved by some of the company's main shareholders, including Sequoia and Heartland. Although the move is thought to be indicative of a planned listing, the spokesperson said that it is still "very early days" and that Klarna do not presently have any immediate plans to go public. They have not yet decided on where to list, either, though setting up the new legal entity in the U.K. does offer them more flexibility over which stock exchange they opt for. The spokesperson did add that the restructuring does not affect anyone's roles nor Klarna's Swedish operations, as "Klarna Holding will continue to be the regulated financial holding company under the direct supervision of the SFSA and we will continue to hold a Swedish banking license." With a current worth of $6.7 billion, Klarna is one of the major players in the European payments industry. Their "buy now, pay later" service is distinct from competitors such as PayPal and Stripe in that it allows customers to pay in instalments. At the peak of the pandemic-driven e-commerce boom, Klarna was valued at an impressive $46 billion - a figure which dropped to $6.7 billion as the technology valuations bubble deflated. The company has since accrued over $4 billion in funding from investors including Sequoia, Silver Lake, and Ant Group. The U.K. had previously been looking into imposing stringent regulations on the "buy now, pay later" market, but reportedly planned to scrap them after a number of the biggest players warned they may have to leave Britain if the rules were overly "heavy-handed". Klarna then made a commitment to strive for profitability, culminating in its first profitable month in 2021. Additionally, the business has launched an AI image recognition tool that can identify certain products, such as jackets and headphones. This week, Klarna managed to reach a deal with its workers in Sweden to avoid a potential strike.
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