Sweden’s Klarna files for long-awaited IPO in the US

Stockholm — Payments group Klarna says it has confidentially filed documents to go public in the US, making it the largest Swedish company to float its shares in America since Spotify’s listing in 2018.

The buy-now-pay-later (BNPL) company said this week it the filed paperwork with the US Securities and Exchange Commission for an initial public offering (IPO), but the number of shares to be offered and the price range had yet to be determined.

Klarna’s IPO will be one of the largest for a European company in 2025, with only the likes of Revolut, which is valued at $45bn and widely expected to go public next year, expected to top that listing.

Klarna came into the investor spotlight after its valuation jumped from $5.5bn to $46.5bn in about two years following three funding rounds between mid-2020 and 2021.

CEO Sebastian Siemiatkowski cofounded the company in 2005, a year before the founding of Sweden-based Spotify, which was listed with a valuation of about $28bn.

Klarna and Northvolt, another Swedish company, were expected to follow suit. But Northvolt has put its IPO plans in cold storage as it has been scrambling to secure the funding it needs to stay afloat.

US focus

Siemiatkowski had in August hinted at a potential IPO next year, saying it “sounds reasonable”, but cautioned that no definite commitment was made.

He had said Klarna might lean towards a US listing, but had also seriously evaluated some European options.

“For Klarna, the choice falls in line with the company's focus on US expansion,” said Navina Rajan, PitchBook’s senior EMEA private capital analyst.

“The less scrutiny on profitability for tech companies seen in the US may also help alleviate cost pressures caused by expansion,” Rajan said.

When Klarna was planning to go public in 2021, Siemiatkowski had shown interest in a direct listing — where a company does not sell new shares and circumvents the costly process of a traditional IPO. But it shelved those plans and raised funds at a $6.7bn valuation, which was a huge cut from its peak.

Bloomberg News reported earlier in 2024 the company had considered seeking a valuation of about $20bn for its IPO.

At that level, some shareholders may lose money as the company raised capital in two funding rounds at a much higher valuation in 2021 from investors such as rapper Snoop Dog, SoftBank’s Vision Fund, Sequoia Capital, London-based firm Atomico and Abu Dhabi’s Mubadala Investment Company.

Klarna reported a first-half adjusted profit of 673-million Swedish kronor ($61.74m) in August, driven by job cuts and the implementation of artificial intelligence (AI) for customer services.

The company also reported a 27% rise in first-half revenue to 13.3-billion kronor, boosted by revenue growth of 38% in the US. Its adjusted profit compares with a loss of 456-million kronor a year earlier.

Klarna has been expanding heavily in the US, while cutting costs through layoffs and the use of AI in an effort to boost profits ahead of the IPO.

According to its website, the company offers direct payments, pay-after-delivery options and instalment plans to about 85-million active customers across more than 575,000 merchants in 26 countries.

Reuters

($1 = 10.9010 Swedish crowns) (Reporting by Supantha Mukherjee in Stockholm and Nilutpal Timsina and Niket Nishant in Bengaluru; Editing by Rashmi Aich)