Swedish fintech firm Klarna is preparing for an initial public offering (IPO) after meeting key prerequisites, including establishing a US presence, demonstrating a sustainable business model, and showing substantial growth potential, according to CEO Sebastian Siemiatkowski. The company's listing is speculated to take place next year, following the establishment of a new UK-based holding company. However, it remains uncertain whether the listing will occur in London or New York.
Klarna has been working on a restructuring plan in collaboration with its major shareholders to simplify its corporate structure ahead of the listing. This development comes on the heels of the firm's first fully profitable quarter since 2019, reporting an operating profit of SEK 130m (£9.63m). This profitability was achieved after implementing a significant cost-cutting program and reducing borrower defaults.
The Swedish fintech firm, which reported £86m in UK revenues in H1 2021, is considered a potential disruptor in the global retail banking and fintech market. Klarna's planned IPO comes amid a global tech downturn and intentions by other fintech companies such as Monzo, Starling, and Thought Machine to go public. Notably, Monzo is reportedly planning to raise £300m from investors before its IPO.
The UK holds strategic importance for Klarna as it is the company's third-largest market after the US and Germany. The decision to establish a UK holding company may be driven by the country's favorable regulatory environment and respected global financial market. The new entity aims to surpass Klarna's revised $6.7 billion valuation while attracting international investors familiar with the UK market due to the holding company's proximity to the London Stock Exchange. Despite the changes, Klarna plans to maintain its regulated status under the Swedish Financial Supervisory Authority (SFSA) and retain its Swedish banking license.
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