Swedish fintech and Buy-Now-Pay-Later (BNPL) player Klarna is in talks to raise $500 million.

According to a Reuters Exclusive, Klarna, the Swedish fintech and unicorn, is talking with investors to raise as much as $ 500 million at a valuation of $ 10 billion. During its previous fundraise in August 2019, Klarna raised $ 460 million at a post-money valuation of $ 5.5 billion. Reuters’ sources said the money would be raised from both existing and new investors. An announcement is likely within days, they said. (Reuters)

COVID-19 and BNPL

Klarna helps shoppers with an installment (buy-now-pay-later) scheme in which they can pay for their purchases in four equal amounts spread over six weeks.

BNPL lenders have seen a boom in their business following the lockdowns during the coronavirus pandemic. Shoppers had to resort to online transactions and many of them had their credit cards maxed out due to the difficult economic conditions.

Klarna shows rapid growth, but there’s red ink all over

In its financial report for the six months ended June 2020, Klarna reported robust growth statistics:

• In the US, consumers grew by 550% compared to the same period in 2019
• In the UK, consumers grew by 120%
• The number of total monthly active users nearly doubled to 12 million
• Klarna’s app is currently recording 45,000 installs per day, three times faster than last year
• Volumes at the company’s in-store proposition have grown more than 75% over the last year across more than 13,000 stores

However, the company reported losses of nearly $ 60 million in the first half of 2020.

That number follows a 2019 result in which Klarna reported a loss of 1.1 billion Swedish krona ($113 million) on revenues of 7.2 billion krona. This was the first annual loss it reported since it was founded in 2005.

IPO on the horizon

One source told Reuters that the proposed new funding round would perhaps be Klarna’s last before an IPO.

The source further said that the company may soon start discussions with investment banks in connection with a likely US listing.

Last month, Klarna CEO Sebastian Siemiatkowski told Reuters that the US was on track to become the company’s largest market, as soon as by the end of the year. He added that a stock market listing for the Swedish fintech may come about in one or two years – perhaps in the US.

“The prerequisites are coming into place for doing (the IPO),” he added. “We are definitely closer to being able to do that then we have been before.”

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