Swedish Fintech startup Klarna Bank AB is apparently considering a share listing in the U.S. market. According to a Bloomberg report, Klarna is likely to choose the U.S. market even as the U.K. authorities continue to scrutinize the buy-now-pay-later startups in the region.
In the US, Fintech initial public offerings have boomed in 2021 with several floating shares via a SPAC deal like SoFi completed last week.
Klarna, said to be one of the most valuable startups in the buy-now-pay-later space, allows users in several European markets to borrow money for their shopping needs and repay in installments with zero interest. However, the regulators have expressed concern over such a business model, citing an increase in bad debts.
The U.K.’s capital markets regulator, Financial Conduct Authority (FCA), has earlier said that it would regulate the sector as these services saw a nearly fourfold rise in 2020 amidst a pandemic triggered by the Covid19 virus.
A BBC report earlier this year stated that over five million people in the U.K. alone used such ‘Buy now, pay later (BNPL) services, with total transactions amounting to £2.7 billion last year. It further added that one in 10 people using these services had debt arrears.
Bloomberg quoting the Sunday Times, said that Klarna’s Chief Executive Officer and co-founder Sebastian Siemiatkowski has hinted that the sector is likely to face more scrutiny and hence the Fintech startup would go for an IPO on the American exchanges. Klarna’s decision comes despite Chancellor Rishi Sunak’s push to attract fintech companies to revamp the capital in the wake of Brexit.
Klarna, backed by China’s Ant Group, is currently valued at $31 billion and has garnered over 250.000 merchants. The Swedish startup is looking to raise a fresh round from Japanese Internet giant SoftBank, as per CNBC.
The BNPL market is exploding in Europe, with startups having had raised over €900 million in the last few months. It is also known as Point-of-Sale (POS) credit or POS financing that offers installment payments with zero interest, unlike the traditional credit models that attract hefty interest rates.
According to reports, the European BNPL market will grow to €300 billion by 2025. Some other notable players in this segment are Afterpay (Clearpay in the U.K.), Alma in France, Twisto from Poland, and Paypal – pay in 4.