Klarna signage during the company’s IPO at the New York Stock Exchange on Sept. 10.
(Bloomberg) — Klarna Group Plc rose 15% in its trading debut after the company and some of its backers raised $1.37 billion in an initial public offering that signals the market for new listings has room to run.
The financial services company’s shares, which rose as much as 43% Wednesday, closed at $45.82 each in New York, above the IPO price of $40 apiece. The double-digit oversubscribed offering priced on Tuesday above the marketed range, and about half of the prospective investors placing orders were left empty handed.
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The closing price gives the company a market value of more than $17 billion, based on the outstanding shares. Though stock options and warrants add a bit to that valuation, it’s a steep drop from the $45.6 billion figure reached in 2021, at the height of the Covid 19-fueled online shopping bonanza.
A private funding round the following year sent the valuation plunging to $6.7 billion, as a cocktail of inflation and higher interest rates put pressure on fintech business models around the world, including Klarna’s position as a provider of so-called buy-now, pay-later financing.
To Klarna Chief Executive Officer Sebastian Siemiatkowski, the IPO cements the evolution of Klarna’s business beyond its roots in buy-now, pay-later. The firm, which rose to prominence during the pandemic-era jump in e-commerce, has more recently been making a push into offering other banking products like savings, checking accounts and credit cards.
WATCH: Klarna CEO Sebastian Siemiatkowski says the company has decades of growth ahead and discusses the current competitive and regulatory environment.Source: Bloomberg
“Investors finally were asking very few questions about buy now, pay later, which was very nice to see the message and the success of Klarna coming across,” Siemiatkowski said in an interview. “That this isn’t just buy now, pay later. That we offer all types of payment methods and that we offer the card and all types of retail, banking, financial services.”
Founded in Stockholm, the company has been expanding its offering of its “fair financing” product, which allows customers to pay off larger-ticket items over a longer period of time. While that’s provided a boon in net interest income, the push has also weighed on results because Klarna is required to book larger provisions for potential credit losses on these longer-term loans.
For now, such loans amount to about 2% of Klarna’s total transactions, an earlier filing with the US Securities and Exchange Commission showed. The company expects that share to grow after the number of merchants offering the fair financing loans doubled in the last two years.
Klarna has spent the better part of the past year preparing for its public debut. As the firm readied its listing earlier this year, though, it was thrown into disarray as markets went haywire amid US President Donald Trump’s tariff announcements.
Siemiatkowski hit pause on the offering before bringing it back to life in recent weeks. He said one of his favorite memories from the roadshow was when a staffer of one of his investors approached him about getting a credit card from the fintech.
“The guy at the security says, ‘Oh, you’re from Klarna,’” the 43-year-old CEO recalled. “And he’s like, ‘I wanna get the card. I’m on the waiting list. Just get me the card.’ So I think that was probably the height of the whole thing.”
IPO Market Heating Up
The listing comes as the US IPO market is heating up, with shares of companies including Circle Internet Group Inc. and Figma Inc. surging in their attention-grabbing market debuts. With Klarna’s listing, first-time share sales have raised $25.7 billion this year, excluding closed-end funds and other financial vehicles, above the $20.4 billion raised in the same period in 2024, according to data compiled by Bloomberg.
Along with Klarna, Gemini Space Station Inc., the crypto exchange led by the billionaire Winklevoss twins, Blackstone Inc.-backed engineering firm Legence Corp. and Black Rock Coffee Bar Inc. are among those pricing their IPOs this week.
The financial technology company and some of its backers sold 34.3 million shares for $40 per share. Selling holders — including executives, co-founder Victor Jacobsson, entities related to Sequoia Capital and Danish billionaire Anders Holch Povlsen’s Heartland A/S — sold 29.3 million shares.
Klarna itself only sold about $200 million worth of shares because the company is already “self-sustainable from a capital perspective,” Siemiatkowski said in an interview with Bloomberg Television. The company went ahead with the listing in order to make the trading of its stock more orderly than it had been on private markets, he added.
“We’ve had 20 years of private investors and employees who bought into the stock — over time it became quite an effort to keep track of private transactions in Google Sheets,” he said.
The company had a net loss of $153 million on total revenue of $1.52 billion for the six months ended June 30, compared with a net loss of $38 million on total revenue of $1.33 billion in the corresponding period a year earlier, according to the filing.
Sequoia Capital was expected to have about 22% of the voting power after the offering, the filing shows. Povlsen’s Heartland is set to have around 8.9%, Jacobsson would have around 8.8% of the votes, and Siemiatkowski would have 7.4%.
Sequoia has reaped a $2.7 billion gain on its original investment in Klarna with the listing. The firm’s stake was worth $3.2 billion at the time Klarna’s shares priced Tuesday, representing a more than six-fold return for the venture capital heavyweight.
Klarna’s IPO was led by Goldman Sachs Group Inc., JPMorgan Chase & Co. and Morgan Stanley with 11 other firms working on the deal. The shares are trading on the New York Stock Exchange under the symbol KLAR.
–With assistance from Caroline Hyde and Ed Ludlow.
(Updates with closing share price in second paragraph.)
