According to analysts at Deutsche Bank AG, Klarna’s estimated valuation has now risen to $14.6bn after a shareholder increased its valuation.
Chrysalis Investments Ltd recently raised its valuation of its Klarna stake to £120.6m, up from £100.3m the prior quarter. This adjustment comes as Klarna prepares for a planned initial public offering (IPO) in the US next year.
Chrysalis noted that the decision was influenced by the rising share prices of Klarna’s publicly listed competitors. Shares of fellow buy-now-pay-later (BNPL) providers Affirm. and PayPal Holdings have surged over the past year, rising 145% and 59%, respectively.
In August, reports confirmed that the fintech is actively preparing for a public listing to enhance capital access. With its growing presence in the US, home to major global stock markets, a US IPO is seen as a promising step forward and has reportedly looked at the New York Stock Exchange for its listing.
Bloomberg reported that Klarna has considered seeking a valuation of around $20bn in the offering.
Recently, Klarna has enjoyed a strong wave of success. Founded in 2005, the fintech has steadily broadened its range of financial services, though its BNPL offerings have undoubtedly become the business’s most profitable segment.
Klarna has recently focused on streamlining its operations, selling core assets to refine its business model. In its latest move, the Swedish company offloaded its UK loan book to a prominent hedge fund. A consortium advised by Elliott Advisors UK, part of the US-based investment firm, acquired Klarna’s short-term, interest-free product receivables.
However, there have been some recent bumps down the road. Klarna’s boardroom saw a recent shake-up as Mikael Walther was ousted following clashes with leadership.
Klarna also voiced strong opposition to the Consumer Financial Protection Bureau’s (CFPB) recent interpretive rule on BNPL services in the US. Under this new rule, BNPL providers are classified as credit card issuers, meaning that users will now receive the same legal protections and rights as traditional credit card users.
Klarna and other BNPL firms argue that these changes could impose unnecessary regulatory burdens on their services, describing the regulations as “baffling”.
At the time, in a blog post, Klarna wrote: “Trying to regulate BNPL like a credit card is like comparing apples with oranges. So today’s announcement is confusing. Klarna is already working to a high standard in investigating disputes, pausing payments, providing consumers with comprehensive billing statements.”
The Financial Technology Association (FTA) filed a lawsuit challenging the CFPB’s new rules, aiming to persuade the bureau to withdraw the regulations and collaborate with the industry on more tailored guidelines.
Despite these challenges, the BNPL sector in the US continues to flourish, leaving uncertainty about how this will affect Klarna’s upcoming IPO next year.
