Swedish fintech company Klarna Bank AB, known for its "buy now, pay later" service, has confidentially submitted its initial public offering (IPO) documents to the U.S. Securities and Exchange Commission. The company has yet to determine the number of shares to be issued or the price range and will decide the timing of the listing based on market conditions.
Analysts recently valued Klarna at around $15 billion, a significant drop from its peak valuation of $46 billion during a financing round led by SoftBank Vision Fund 2 amid the fintech and e-commerce boom of the pandemic. In 2022, Klarna faced an 85% writedown in its valuation to $6.7 billion during its latest major financing round. Aside from SoftBank, Klarna's investors include Sequoia Capital and London-based Atomico.
Klarna CEO Sebastian Siemiatkowski has previously expressed concerns that Europe's unfavorable regulations regarding employee stock options might drive talent towards major U.S. tech firms like Google, Apple, and Meta. The company has been considering an IPO for some time, with Siemiatkowski indicating earlier this year that a 2024 IPO is a possibility. One of Klarna's main competitors, Affirm, went public in 2021 and is valued at approximately $18 billion.
In August, Klarna reported profitability for the first half of the year. The decision to list in the U.S. is a setback for European stock exchanges, which have been encouraging local tech companies to list domestically. For instance, the London Stock Exchange has implemented reforms to make the UK more attractive for tech IPOs, including allowing founders to issue dual-class shares.
Siemiatkowski has considered various markets for Klarna's IPO, including London, but in 2021 suggested that a U.S. listing was more likely, partly because of higher recognition in the American market. According to PitchBook analyst Navina Rajan, European companies have increasingly favored U.S. exchanges, with the share of European companies listing on European exchanges dropping from a decade-low, despite some recovery in the European IPO market in the third quarter of this year.
