Klarna, backers raise $1.37 billion in oversubscribed IPO

Klarna Group Plc and some of its shareholders raised $1.37 billion in a US initial public offering priced above a marketed range, according to a person familiar with the matter.

The financial technology company and some of its backers sold 34.3 million shares for $40 per share, the person said. The offering had been expected to price above the marketed range, Bloomberg News reported earlier.

The IPO ended more than 20 times oversubscribed, the person said, asking not to be identified because the information is private.

A representative for Klarna declined to comment. The pricing was first reported by IFR.

The pricing gives Klarna a market value of about $15.1 billion, based on the outstanding shares. Stock options and warrants add a bit to that valuation, which is a substantial improvement from Klarna’s 2022 private funding round, when the valuation plunged to $6.7 billion as financial technology companies’ fortunes seesawed.

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Still, the current valuation is a steep drop from $45.6 billion in a $639 million investment led by Japan’s SoftBank Group Corp. in 2021.

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. First-time share sales have raised $24.4 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.

Klarna was planning to sell 5.6 million shares in the offering, and selling holders — including executives, co-founder Victor Jacobsson, entities related to Sequoia Capital and Danish billionaire Anders Holch Povlsen’s Heartland A/S — were set to sell 28.8 million shares. The shares were marketed for $35 to $37 apiece.

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.

Digital Bank Push

Founded in Stockholm, Klarna rose to prominence as a provider of so-called buy now, pay later financing, which grew in popularity during the pandemic-era boom in online shopping. Under Chief Executive Officer Sebastian Siemiatkowski, the company is making a push to become a global digital bank, aiming to sign customers up for debit cards and other products.

Shares of Klarna rival Affirm Holdings Inc. have rallied 45.2% this year.

While Klarna is best-known for its short-term loans, it’s been expanding its offering of its “fair financing” product, which allows customers to pay off larger-ticket items over a longer period of time.

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 is required to book larger provisions for potential credit losses on the longer-term loans, which has weighed on its reported results in recent quarters. It warned in Tuesday’s filing that it expects the expansion of the fair financing product to have a near-term negative impact on results.

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%.

The offering is being led by Goldman Sachs Group Inc., JPMorgan Chase & Co. and Morgan Stanley, with 11 other firms working on the deal. Klarna is expected to begin trading on Wednesday on the New York Stock Exchange under the symbol KLAR.

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