Klarna lays groundwork for IPO with UK holding company

Klarna, a Swedish buy now, pay later company has established a holding company in the UK. The required legal entity restructuring is underway.

The British holding company, which will be at the top of its corporate structure, is seen as a move closer to the firm getting a stock market listing. Granted, the BNPL firm still does not have immediate-term plans to go public. To begin with, it is yet to make a decision on where it wants to list. Having the holding company in the UK does not necessarily mean that the firm will list there.

Klarna is a well-established company that has grown into a major player in Europe’s payments industry. At the peak of COVID-19 when there was a boom in online shopping, the BNPL company was valued at $46 billion. Interestingly, its worth dropped by 85% to $6.7 billion as tech companies saw their valuations drop. Amid the turbulent times, it also dropped about 10% of its workforce.

Notably, the earnings released at the start of the week further point to the firm’s recovery. It reported its first quarterly profit in four years with a net profit of SKr90 million in Q3’23. In comparison, it recorded a loss of SKr2.1 billion a year earlier.

The forecast is for the stock market listing to happen within the first half of 2024 at a valuation of between $15 billion - $30 billion. This would still be significantly below its peak valuation of $46 billion in 2021 but over two times its valuation during its last funding round in 2022.