Klarna to opt for direct listing in the light of private funding

Klarna’s Chief Executive, Sebastian
Siemiatkowski has revealed that the Swedish payments firm may list on the stock market without raising money by selling new shares.

The company’s purported acquisition of more private funding aids this development, banking sources say.

The “buy now, pay later” firm completed a $650 million funding round in September from a group of investors led by Silver Lake that valued it at $11 billion.

The banking sources, and another source familiar with the company, said it was finalising another private funding round to raise at least $500 million that could be completed within days.

Chief executive Sebastian Siemiatkowski declined to comment on that, but said a direct listing – where the company would not sell new shares and circumvent the costly marketing process of a traditional stock market listing – was a possibility.

Klarna has been widely rumoured to be among a number of looming tech company listings, with bankers expecting it to complete a New York initial public offering (IPO) or a merger with a special purpose acquisition company (SPAC) – a listed vehicle created to bring private companies to market.

However, Siemiatkowski ruled out a SPAC deal.

Banking sources who have been in talks with Klarna said the company had recently been moving to favour a direct listing.

Direct listings are viewed by some as a potential solution to the difficulty of finding the right price in a stock market listing, especially in the tech space where many companies rise dramatically in value after listing.

Companies usually do not need to appoint investment banks for such a process, denying them the lucrative fees that come with a traditional IPO.

Klarna will still consider a traditional IPO, but is waiting for the appointment of Niclas Neglen as chief financial officer in March before getting the process started, Siemiatkowski said.

Siemiatkowski did not rule out a 2021 listing, but said it was more likely next year.