Klarna, the buy now pay later (BNPL) finance giant, has removed the right of large shareholders to block smaller investors’ share trades ahead of a prospective $20bn US float.
Sky News has learnt that the Stockholm-based company, which has in the region of 150m customers, notified investors last week that it had taken control of stock transaction approvals and eliminated special rights held by a small number of its principal shareholders.
In an investor memo, Klarna said it had “listened to…shareholders”.
“A lot of you have raised issues with the slow process of approving secondary transfers but even more with lack of certainty whether the buyer will be able to complete the transaction.”
“Large shareholders,” it said, “do not have the right to interfere in the process any more”.
The preferential purchase rights held by Klarna’s founders had been a source of growing tension ahead of a potential blockbuster flotation in New York, which insiders say is now likely to take place in the first quarter of 2025.
Klarna has established a new UK-registered holding company as part of its journey towards a public listing, with the elimination of the shareholder veto taking place simultaneously.
Investment banks have yet to be appointed for a float, with people close to the company saying they anticipate them being selected in the next three months.
The company, which employs about 5,000 people, has been the subject of intensifying float speculation for months.
Its founder and chief executive, Sebastian Siemiatkowski, said in January that it was expected to take place “quite soon”.
The decision to establish a holding company in Britain reflected the UK’s standing from a legal, regulatory and capital markets perspective, sources said last year.
Nevertheless, its listing in the US will be a disappointment to the London Stock Exchange, which had been pushing for Klarna to float in the UK.
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Klarna was forced to slash its valuation to $6.7bn (£5.3bn) in a funding round in 2022, having once been valued at $46bn (£36.6bn) and drawn backing from investors such as SoftBank’s Vision Fund, Sequoia Capital and Mubadala, the Abu Dhabi sovereign wealth fund.
Bankers believe that based on a comparison with New York-listed peer Affirm Holdings, Klarna should attract an IPO valuation of between $15bn and $20bn.
Klarna’s corporate reorganisation comes after the UK government appeared to veer away from a crackdown on the BNPL sector.
Sky News revealed last July that ministers were planning to shelve new legislation to regulate providers such as Klarna, with future rules instead incorporated into a reformed Consumer Credit Act.
Consumer campaign groups responded with fury to the decision, which has still to be announced by the government.
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Last autumn, the Financial Conduct Authority said it had secured contract changes for BNPL customers after an explosion in the use of such products.
Research published by the City watchdog showed that 27% of adults – roughly 14m people – had used BNPL at least once in the second half of 2023.
Klarna has previously declared itself in favour of “proportionate” regulation of the sector.
The company is expected to issue quarterly results on Thursday demonstrating further progress on the path to sustained profitability.
