Klarna targets acquisitions as it raises fresh $1bn of investment

Klarna has said it is on the hunt to make acquisitions as it raised a fresh $1bn of investment, valuing the Swedish fintech at $31bn, almost six times more than it was worth at its last round 18 months ago.

Sebastian Siemiatkowski, Klarna’s chief executive, told the Financial Times that the “buy now, pay later” company spied the chance to capitalise on surging demand in the US, and that the fundraising would give it “additional firepower” that could be used “if we’re looking at some M&A”.

Klarna has done some deals with other payment companies such as the $150m acquisition of Germany’s Sofort in 2013 but Siemiatkowski said it now saw more opportunities in other parts of retail banking.

“There are some great start-ups out there that don’t have the distribution power, the 90m users that Klarna does. We do believe this is going to be a transformative time for retail banking and payments, and we want to serve our customers with as much value as we can so if we see such opportunities it could be very interesting,” he added.

Klarna has enjoyed a dizzying rise in valuation as it plans for a stock market listing following its successful launch in the US. Its latest valuation of $31bn reconfirms its status as Europe’s most highly valued private fintech and follows previous valuations of $11bn in September 2020 and $5.5bn in August 2019.

Siemiatkowski said that Klarna was planning to list publicly in the next “one or two years”, and increasingly saw the attraction of a direct listing as fellow Swedish tech company Spotify used. A direct listing involves selling existing shares rather than new ones and cuts out the role of investment banks.

He said nothing had been decided and that he was not “fully read up” on direct listings. But he added that the traditional initial public offering process seemed to result in too much value going to investment banks and too little to companies: “From Klarna’s perspective, this banking industry has a lot of shady business models.”

Michael Moritz, Klarna’s new chairman, has spoken out in support of direct listings, and Siemiatkowski said it would be interesting for the fintech to “explore new models”.

Klarna’s ambitions are increasing, with Siemiatkowski saying the fintech had the chance to transform retail banking in the same way that Tesla had changed carmaking. He insisted he felt no pressure from the new $31bn valuation, following the $1bn funding round, which ranks Klarna ahead of all listed Swedish banks and only just behind Nordea in the Nordic region.

“We are in this trillion-dollar market called credit cards, retail banking and payments. Even if it’s this high valuation, we’re still a fraction of this industry. It’s really exciting because it’s not an industry that has put customers first. There is no reason why Klarna couldn’t be worth a lot more than it is currently,” he added.

Klarna offers customers of websites such as Asos, H&M, Etsy and Macy’s the chance to pay after receiving goods. It makes money by charging merchants and in some countries consumers for late payments, a practice that has caught the attention of regulators in the UK and Sweden. It processed payments of $53bn for retailers last year, making operating income of $1.1bn but a net loss of $160m as a result of its expansion in the US.