The monster round would follow the fintech’s September raising of $650 million.

Bloomberg reports that Klarna Bank AB, the Swedish fintech startup that was valued at $10.65 billion in September, may raise another $1 billion. But this time its valuation could be $31 billion – nearly thrice its valuation from just six months ago.

Significantly, unnamed sources told Bloomberg that investors in the proposed round could be eyeing a bonanza from a potential public listing by Klarna next year. The formal announcement of the fundraise is expected within a few days.

Klarna: Valuation sweepstakes

If Klarna raises new funds at that $31 billion tag, it would again be in pole position as far as European fintech valuations are concerned.

Last month, fintech and online payments firm Checkout.com announced a Series C fundraising of $450 million led by Tiger Global Management that valued it at $15 billion. That made Checkout.com the most valuable fintech startup in Europe and the fourth most valuable globally.

Klarna benefits from the pandemic-triggered digital surge

The pandemic caused a sharp decline in the use of cash and lifted digital payments.

A McKinsey estimate says the reduction in cash seen in 2020 was four to five times the annual decrease in cash usage observed over the past few years.

Meanwhile, online spending with US retailers shot up 30% from 2019 levels to $347 billion. That was equivalent to 6X the 2019 annualized growth rate.

Klarna extended its success with digital payments to a buy-now-pay-later offering. The product lets customers pay for their purchases in installments without any interest charges or fees. Klarna makes its money by getting a percentage from the merchants making the sale.

Klarna’s highly anticipated IPO

Meanwhile, a Reuters exclusive said Klarna may choose a direct listing instead of an IPO.

“I think it’s a very interesting concept. I know that Spotify did it successfully,” Klarna chief executive Siemiatkowski said, referring to the music streaming service (NYSE: SPOT). He added: “I can see it’s a more modern way of making a company public … if you hear us having an interest in it that is true because we are interested in it.”

Siemiatkowski also dismissed a SPAC deal, saying he was not convinced it would be a preferred route to going public.

Whatever the final decision, it would have to wait until Niclas Neglen joins as Klarna’s chief financial officer in March.

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