Swedish “buy now, pay later” app Klarna announced it has raised over $650 million following a $500 million private funding round, valuing the firm at a staggering $11 billion. [swedish 500m 650m september]
- Swedish payment app Klarna has raised over $650 million in private funding, valuing the firm at $11 billion
- The CEO of Klarna hinted at a possible direct listing instead of an IPO, which disappointed banks hoping for an IPO or SPAC
- Direct listings are seen as a good way to find the correct price for a company’s shares, especially for tech companies like Klarna
- The company never went public and they bag enough private funding
- Klarna provides payment solutions for online storefronts and allows post-purchase payments, generating over $1.6 billion in yearly revenue
In February 2021, Swedish fintech company Klarna was close to listing on the stock market, but the CEO avoided the move as the company was raising enough money in private funding.
In a $650M private funding round led by Silver Lake, Klarna is now valued at $11 billion, and that’s all from private funding. The round was held in September 2020, which gave the executives the confidence to not for an IPO.
Following the $650 million round news of not going public, some close and unverified sources told Reuters that the Swedish fintech company was close to closing another $500 million in a private funding round, and the news came to be true in due time.
Even though the rumors of Klarna “may” go public were true, the company never went public with the shares, especially via an IPO. The CEO Sebastian Siemiatkowski didn’t comment on the IPO news, but he give a hint that the company could go for a direct listing, something that’s very untraditional in the stock market.
“They don’t need any new money from an IPO, so I can see why a direct listing makes sense for them,” said one bank claiming to be in talks with Klarna officials.
“I think it’s a very interesting concept. I know that Spotify did it successfully…I can see it’s a more modern way of making a company public … if you hear us having an interest in it that is true because we are interested in it,” said Siemiatkowski. Even though he said it was a possibility, it never happened. [swedish 500m 650m september]
Now that the CEO hinted at a direct listing instead of an IPO, fellow fintech companies, especially some banks that were expecting Klarna to go public or offer an IPO were disappointed in the move.
Specifically, the banks were hoping that if Klarna didn’t go through a New York IPO, the Swedish company opt for a Special Purpose Acquisition Company (SPAC), and that, too, didn’t happen. [swedish 500m 650m september]
In fact, when Siemiatkowski came to know about the SPAC rumors, this is what he had to say: “I’m happy to kill these SPACs rumors as I feel that’s very, very unlikely. No one has yet convinced me about why that would be a preferential route.”
A company can go public and sell shares to the public in two ways: by an IPO or a Direct Listing. In a Direct Listing, the company doesn’t issue new shares or raise new money, but instead, it puts existing shares up for sale on the stock market.
Direct Listings are believed to be helpful in finding the correct price for a company’s shares, particularly for tech companies, whose value can change significantly after they go public. The same was seen to be the case with Klarna, which is why the executives weren’t in the favor of going with an IPO.
Earlier we talked about banks expecting Klarna to go with an IPO, this was because traditional IPOs are generally in favor of banks as they charge lucrative fees to the companies. At the time of the $650 million and $500 million investments from private funding, the CEO stated that the company would wait for the final decision regarding the public listing until the appointment of the new CFO in March.
“I want to get Niclas on board, get him a chance to get into the company. And so then we’ll evaluate and see what makes sense,” said Siemiatkowski.
Niclas Neglen did get on board as the new CFO and Klarna didn’t go public at all: neither with an IPO nor through a direct listing.
Founded by Sebastian Siemiatkowski and Niklas Adalberth in 2005, Klarna is a Swedish fintech company that provides payment solutions for online storefronts and allows post-purchase payments as well, hence, “buy now, pay later.” The company is headquartered in Stockholm, Sweden, and generated over $1.6 billion of yearly revenue. [swedish 500m 650m september]
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