Buy now, pay later companies such as Klarna and Block’s Afterpay may face tougher rules in the UK
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Klarna is famous for its popular “buy now, pay later” service. announced on wednesday The company has confidentially filed IPO documents with the SEC.
The Swedish payments company has yet to publicly file an IPO prospectus. The offering will follow the SEC’s review process and be subject to market conditions, the company said.
Analysts recently valued Klarna, founded in 2005, at $15 billion. The company was valued at $46 billion in a funding round led by SoftBank Vision Fund 2 amid a surge in fintech stocks and e-commerce amid the pandemic.
But Klarna’s valuation was slashed by 85% in its most recent major funding round in 2022, when the company was valued at $6.7 billion.
In addition to SoftBank, Klarna’s shareholder list includes Sequoia Capital and London-based Atomico.
Klarna CEO Sebastian Siemiatkowski previously said in an interview with CNBC that Europe’s unfavorable regulations on employee stock options may put the company at risk of losing talent to American technology giants such as Google, Apple and Meta.
Plans for an IPO have been brewing for some time. Siemiatkowski said in an interview with CNBC’s “Closing Bell” in February that a 2024 IPO was “not impossible.” One of the company’s main competitors, Affirm, went public in 2021 and is currently valued at about $18 billion.
In August, Klarna said it had turned a profit in the first half.
Klarna’s decision to list in the United States is a major blow to European stock exchanges, which have been trying to encourage local technology companies to list domestically.
For example, the London Stock Exchange has introduced reforms to make the UK a more attractive market for technology companies to list, including allowing founders to issue dual-class shares, allowing entrepreneurs to maintain control of the company’s strategy and direction.
Siemiatkowski has not previously committed to listing in one market over another, and London is one of the markets where he is considering an IPO for Klarna.
However, he said in 2021 that the company was more likely to list in the US rather than the UK, partly due to greater visibility.
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