Swedish fintech giant Klarna, known for its buy now, pay later (BNPL) services, has made another step towards a potential initial public offering (IPO) that could value the company at over US$15 billion (£12 billion).
According to a Sky News report, the company has initiated the incorporation of a new UK holding company, a move acknowledged as a step towards Klarna going public.
Yet, despite the establishment of a UK holding entity, Klarna, which commands a global customer base of 150 million users, has not committed to a London float.
The City is likely to pressure Klarna into listing on the London Stock Exchange, but as seen earlier this year with British semiconductor firm Arm Holdings, the allure of a higher valuation through a New York listing is strong.
However, the UK government's recent pivot away from implementing stringent regulations on the controversial BNPL sector makes for a compelling case.
The Treasury is reportedly considering shelving plans for a crackdown on BNPL products, which would provide regulatory leniency for Klarna’s UK operations, though a Labour government is likely to be more hawkish on the sector.
British customers have been increasingly using BNPL platforms like Klarna to cover essential purchases during the cost-of-living crisis, but campaigners warn of mounting debt burdens associated with the payment model.
Klarna's valuation has been the subject of intense scrutiny after it was forced to slash its valuation by 85% to US$6.7 billion in a 2022 funding round, a stark contrast to its previous valuation of US$46 billion.
Despite this, the company has shown significant progress, having reported its first monthly profit in three years this August after slashing costs and clamping down on slow payers.