Klarna Says Listing Is Increasingly Plausible But Not Imminent

(Bloomberg) -- Klarna Bank AB, the fast-growing Swedish fintech that provides short-term loans to consumers, is increasingly likely to sell shares in an initial public offering.

Chief Executive Officer and co-founder Sebastian Siemiatkowski said in an interview on Wednesday that Klarna isn’t currently working on a listing but may consider one as early as 2022. In its latest funding round, the startup’s valuation reached $45.6 billion, more than four-times higher than last year. 

The competitor of PayPal Holdings Inc. and Square Inc. as well as traditional credit card companies and indirectly banks, lets customers “buy now and pay later” in interest-free installments, when they shop in selected stores.

“We want to challenge traditional banking incumbents, that would apply to everything we do and would include also a listing,” Siemiatkowski told Bloomberg in Warsaw. “It’s more plausible to think that an IPO can happen, but we don’t have any immediate plans and aren’t working on this right now.”

The company hasn’t decided whether to offer new stock in a potential listing, which has become more likely after it granted share options to employees. Asked if bourse entry was on the cards next year, he said: “Could be. We will see. There is no immediate plan.”

While Siemiatkowski sees current markets as “very volatile,” he said that Wise Plc’s direct listing in London a month ago could be a potential model for Klarna. The U.K. software company’s IPO valuation was set during an hours-long auction, rather than through a traditional roadshow for investors.

Fewer Defaults

Klarna won’t oppose U.K. plans to regulate buy-now, pay-later products, providing the authorities create “proportional and outcome-based” rules. Siemiatkowski said that his “pay in 30 days” services are better for retail consumers than credit card debt, which usually includes hefty interest charges and other fees. Klarna’s payment defaults are much lower than those on credit cards offered by banks.

The Stockholm-based company on Wednesday announced expansion into Poland, offering deferred payments in partnership Swedish fashion retailer Hennes & Mauritz AB, as part of its push to enter all European Union markets.

Siemiatkowski, whose parents emigrated to Sweden from Poland in the early 1980s, said he will be looking at acquisitions of Polish IT companies, which offer auxiliary services to Klarna’s core operations, and sees a strong engineering talent pool in the country. He didn’t name any potential targets. 

Klarna’s entrance into Poland’s budding e-commerce market comes after Allegro.eu SA became the most valuable company listed in Warsaw. Banks in the country of 38 million people have created their own cashless payment system, called Blik, which is winning market share from card payments in online purchases.

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