Exclusive: Klarna may opt for direct listing as private funding looms

STOCKHOLM/LONDON (Reuters) - Swedish payments firm Klarna may list on the stock market without raising money by selling new shares, its CEO told Reuters, as banking sources said the company was close to securing more private funding.

FILE PHOTO: A smartphone displays a Klarna logo on top of banknotes is in this illustration taken January 6, 2020. REUTERS/Dado Ruvic/Illustration

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.

“I think it’s a very interesting concept. I know that Spotify did it successfully,” Siemiatkowski said, referring to the music streaming service. “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.”

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.

“I’m happy to kill these SPACs rumours as I feel that’s very, very unlikely. No one has yet convinced me about why that would be a preferential route,” he said.

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

“They don’t need any new money from an IPO, so I can see why a direct listing makes sense for them,” said one.

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.

“I want to get Niclas on board, get him a chance to get into the company. And so then we’ll evaluate and see what makes sense,” he said.

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

Reporting by Supantha Mukherjee and Abhinav Ramnarayan. Additional reporting by Arno Schuetze; Editing by Rachel Armstrong and Mark Potter