Klarna looks to further streamline its business as the Swedish fintech makes yet another major sale of a core asset, offloading its UK loan book to a prominent hedge fund.
A consortium of funds advised by the UK division of US investment management firm Elliott Advisors has purchased Klarna’s UK loan book, described by the firm as its ‘short-term, interest free product receivables’.
The company states that it will still own all consumer-facing activities including underwriting and servicing. Klarna added that the deal will allow it to fund expansion plans amounting to £30bn in volume.
“This is a unique deal, designed to support Klarna’s global growth as we continue on our journey to become the commerce network for the next generation,” said Niclas Neglén, Chief Financial Officer of Klarna.
International growth has been on Klarna’s agenda for some time. The company is active throughout Europe and in the US, and is arguably most widely known for its buy now, pay later (BNPL) services.
In the UK, the company counted over 10 million users over the past 12 months, and is also experiencing growth among retailers. According to the company’s data, the number of retailers offering Klarna in the UK has risen 33% over the past year to over 40,000.
The sale of its UK loan book has much wider significance, however. Klarna has been planning a US public listing for some time, and has been seeking additional revenue streams to support these ambitions.
This has seen the company ponder a secondary sale of shares to its investors, according to Bloomberg. It has also seen asset sales, with the firm offloading its checkout business earlier this year – though it should also be stressed that this decision was also due to the firm’s desire to streamline its business.
On the agreement with Elliot Advisors, Neglén continued: “By efficiently managing our assets, we can deploy shareholder equity more effectively to meet the growing demand for Klarna’s products and services for both consumers and merchants globally.”
