Swedish payments firm Klarna Bank AB announced the closing of a new USD 800 million financing at a USD 6.7 billion post-money valuation. The fresh round of funds will be utilised to enhance its position as a market leader in the US, and also saw participation from existing investors.
CEO of the company, Sebastian Siemiatkowski, stated that the fresh investment is a testament to the strength of the firm’s business model. He further added that especially now, industries required a superior product, strong consumer base, and a sustainable business model.
He further stated that Klarna is the only fintech in the world that has been profitable for its first 14 years of existence. In 2017 the company recorded a 12 percent EBT margin.
The investment of USD 800 million in common equity and a valuation which is 3 times as much higher than back in 2018, outperforms the company’s public peers for the same extent of time. The fintech has not been immune to the significant downward trend of the fintech stock in public markets. The company’s peers are down 80-90% vs peak valuations and consequently the adjustment in Klarna’s valuation is at the same level as with its public peers from its USD 45.6 billion valuation in June 2021.
The advancement is an indication of grim investor sentiment surrounding high-growth tech stocks and BNPL shoppers.
Klarna offers ‘buy now, pay later’ (BNPL) credit to shoppers, and operates in 20 markets globally. The investors include Sequoia Capital, SoftBank Group Corp., Permira and its fundraising in 2021 made it Europe’s most valued start-up. Still, offering online shoppers the option to pay in instalments has come under growing scrutiny from regulators.
In a series of tweets on Monday, Siemiatkowski said Klarna was not immune to the pressures facing its peers and that the company planned to return to profitability after racking up heavy losses because of hostile international expansion.
He further added that the fact that Klarna is valued only slightly higher than the USD 5.5 billion it was worth in mid-2019 was odd considering all the things achieved by the company since.
The fresh investment in Klarna occurred during possibly the worst set of circumstances to distress the stock markets directed by high inflation, mounting fears of recession, rising interest rates, after-effects of the global pandemic, rising gas prices, strains on commerce caused by supply chain disruptions, and, especially in Europe, the disruptions caused by the war in Ukraine.
Despite these challenges, Klarna received strong backing from its existing investors including Sequoia, Silver Lake, Bestseller, the founders, and Commonwealth Bank of Australia. Several investors renowned for their long-term investment commitments to the firm included Mubadala Investment Company and Canada Pension Plan Investment Board. The company intends to permit more than a thousand smaller shareholders to participate in its funding.
Since 2018 the company has evolved into an international leader and innovator in the payments and retail banking sector. With close to 30 million users, Klarna has emerged as a market leader in the US.
About Klarna Bank AB
Klarna has been on a mission to reform the retail banking industry since 2005. With over 150 million global active users and 2 million transactions per day, Klarna is meeting the shifting demands of consumers by saving them time and money while helping them stay informed and in control. Klarna is dynamic in 45 markets with over 400,000 global retail partners, including H&M, Sephora, Nike, Saks, Macys, IKEA and Expedia Group, companies that have integrated Klarna’s innovative technology to deliver a seamless shopping experience online and in-store.