Klarna to establish UK holding company in preparation for billion-dollar IPO
Buy now, pay later (BNPL) giant Klarna plans to establish a new holding company in the UK as part of its preparations for a blockbuster initial public offering (IPO).
Klarna seeks to launch UK holding company for IPO
CEO Sebastian Siemiatkowski sought approval last week among the company’s largest shareholders to form a new legal entity that would sit above its existing corporate structure.
If and when delivered, the company hopes the entity will increase its chances of striking a successful IPO thanks to the UK’s familiar legal, regulatory and capital markets framework.
The company has been toying with the idea of a stock market floatation for some years now, with Siemiatkowski revealing in 2021 that the company was considering a direct listing over the special purpose acquisition company (SPAC) route.
Now with a UK holding company being established, Sky News reports that a listing could arrive as soon as the first half of next year.
Speaking with FinTech Futures, a Klarna spokesperson reinstates that no firm decision on the time or location of the IPO has been made.
They say that the move to restructure has been “in the works for over 12 months” and describes the formation of a UK-registered holding company as “an important early step on a journey towards an eventual IPO”.
Familiar and favourable
The spokesperson adds that the firm decided to register the holding company in the UK as it is a “well-respected global financial market” and because the UK’s legal, regulatory and capital markets framework will be “familiar to our broad, global investor base”.
Aside from a favourable regulatory environment, Klarna’s hopes for a successful IPO will hinge largely on its attractiveness to international investors.
Despite fintech funding falling 17% in the first half of this year, the UK still managed to prove itself as an appealing destination for investment, having secured $6 billion throughout H1, over half the total delivered to the EMEA region.
The familiarity of the UK fintech market among Klarna’s existing investors – including Sequoia, Bestseller, Silver Lake and Commonwealth Bank of Australia – could therefore prove beneficial to its plans to raise the bar above its previously revised $6.7 billion valuation in July 2022.
A UK-registered holding company would also place Klarna within favourable proximity to the London Stock Exchange and its other global counterparts; an ideal standing for when it finally decides where to list.
Klarna considers all these factors “an important ingredient in any eventual successful IPO”, but retains that Klarna Holding will “continue to be the regulated financial holding company under the direct supervision of the SFSA and we will continue to hold a Swedish banking licence”.
