Sweden’s Buy Now Pay Later Fintech Klarna Reportedly Planning to Raise $500 Million at $10 Billion Valuation and Potential US IPO

Sweden’s Buy Now, Pay Later firm Klarna is reportedly planning to secure $500 million in capital via an investment round which could double its valuation to around $10 billion, according to a recent report from Reuters (which cited sources familiar with the matter).

Klarna had raised $460 million in funding last year. The company now claims around 235,000 merchant partners and 85 million customers.

Klarna’s main service allows shoppers to make purchases online via its merchant partners. Payments for products may be settled via easy installment plans. If the round is successful, then the company’s valuation would almost double its previous $5.5 billion valuation back in August of last year.

Klarna recently acquired Italian BNPL company Moneymour. It has also introduced a savings account for consumers based in Germany. The accounts have been set up with assistance from Raisin, which offers an online deposit marketplace.

The privately-owned Swedish firm will still be valued considerably less than its main competitor, AfterPay, which has a market cap of around $15 billion.

Klarna intends to secure just over $500 million from new and existing investors, according to sources familiar with the matter. They claim that an official deal will most likely be confirmed and announced within the next few days.

A Klarna representative noted that the firm’s investors include Bestseller, the Commonwealth Bank of Australia, Dragoneer, and Sequoia Capital.

Established in 2005, Klarna appears to be spending a considerable amount of capital to expand its operations, globally. The company may have spent a lot of its funds to branch out into the US.

Klarna reported $93 million in losses last year. It had managed to make $10 million in profits the previous year.

The Fintech firm will be using the funds raised to further expand its operations in the US, where its app has been downloaded over 2 million times.

BNPL businesses have recorded impressive growth as more consumers prefer to engage in online shopping instead of visiting physical locations due to the COVID-19 pandemic.

Notably, Klarna’s gross merchandise volume (GMV) or the amount of transactions conducted via its payment network were valued at $22 billion during H1 2020.

Klarna believes that the US could potentially become its biggest market, where it’s planning to conduct an initial public offering (IPO) in the coming years.

The firm’s new investment round might just be its last before a potential IPO, according to the sources. They claim that Klarna may be holding discussions with various investment banks which would help with the company’s IPO (if and when it decides to go public).

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