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UK Finance Regulations Could Determine Klarna's IPO

UK Finance Regulations Could Determine Klarna’s IPO

May 19, 2021 at 05:39PM
by PYMNTS

Will the Swedish buy now, pay later (BNPL) firm Klarna list itself on the London stock exchange? It depends on the British government.

Bloomberg News reported on Wednesday (May 19) that Klarna’s decision on whether to go forward with a “blockbuster” listing could come down to the U.K.’s post-Brexit financial services rules. CEO Sebastian Siemiatkowski said he hopes the government “follows the lead of Singapore” in loosening restrictions and allowing customers to “shift banks in the click of a button.”

With these types of regulations in place, Klarna and FinTechs like it could attract business from traditional credit cards. Klara, which allows customers to make BNPL purchases from brands like Asos and Lululemon, has more than 90 million users. The company is considering a listing in London in the next year or two, although it has said it is leaning toward New York.

“In deciding where to list, we are considering a range of factors, including the investment culture and appetite for taking a long-term view, the potential for a fair valuation, and the strength of support for the FinTech sector, which of course is very strong in the U.K.,” a spokesman for Klarna told Bloomberg.

Siemiatkowski said he also has concerns about the future of equity markets after COVID restrictions are lifted and people begin to spend the money they saved up during lockdown. The Bank of England has predicted a consumer boom unlike anything seen in the last 30 years. “As these people start spending again, they’ll start withdrawing money from those savings accounts, and that to me is a bigger risk that we might have a tough equity market ahead of us,” Siemiatkowski said.

Klarna was valued at $31 billion in a funding round that raised $1 billion earlier this year. The company opened a new headquarters in London last month, part of an overall plan for international expansion.