Klarna Could Follow Affirm Holdings In Delaying Anticipated 'Buy Now, Pay Later' Fintech IPO

Swedish fintech company Klarna could be the second "buy now, pay later" company to postpone an anticipated IPO following a delay last week by Affirm Holdings Inc.

What Happened: CEO Sebastian Siemiatkowski publicly said in August that the company could go public in one or two years.

But in an interview with Yahoo Finance this past week, Klarna CEO was less firm about when his company will do its IPO — or if it will do one at all. The interview came on the heels of last weekend's news that competitor Affirm was delaying its IPO until next year.

"There's benefits to IPO-ing and being public, but there's also a lot of benefits to being a private company. Private markets are still very liquid, and also it allows us to be very long-term about what we're doing," he said.

Plans to do one next year may still be in the offing, though. Bloomberg on Thursday named Klarna as one of the most watched Nordic listings expected in 2021, describing it as among "a number of billion-dollar share sales ... already in the works for next year."

Why It Matters: Affirm last weekend announced it was delaying its IPO, originally slated for this month. The blowout performance of share prices right after the listings of Airbnb and DoorDash played a role, prompting the company to slow down to make sure it gets its initial price right.

It was the second company, after Roblox, to hit the brakes on an IPO during the weekend.

Affirm and Klarno are among the crop of fast-growing "BNPL" players, which extend short-term loans to buyers at point of sale, similar to a credit card purchase. Others include Afterpay Ltd AFTPF, Uplift and QuadPay.

The CEO of Affirm is Max Levchin, one of the founders of PayPal Holdings Inc PYPL. Affirm has agreements with Walmart Inc WMT and Expedia Group Inc EXPE, among others. BNPL companies' revenue largely comes from the fees of merchants in their quest for higher consumer conversion rates.

Klarna has emerged as a top competitor. It says it has agreements with 200,000 sellers in 17 countries. Klarna employs 3,500 people and processes 1 million transactions a day.

The company says it has 90 million users, 11 million of them in the US. As of the end of October, it had 14 million active app users globally, with 2 million of those in the US. It captured 64% of "pay later app" downloads in the US in September and took the top spot among shopping apps in Apple's App Store that month, according to the company.

Total net operating income grew 37% year over year to $742 million in the first three quarters of this year.

Silicon Valley venture capital firm Sequoia Capital is Klarna's biggest shareholder. Visa Inc V, Ant Group and musician Snoop Dogg also are among its investors.

The company has offices in New York, Los Angeles and Columbus, Ohio. It recently raised $650 million in a funding round that gave it a $10.65 billion valuation. Menlo Park-based investment firm Silver Lake led the round, which also included Singapore sovereign wealth fund GIC, San Francisco-based investment firm HMI Capital and BlackRock Inc. BLK

The sellers Klarna has agreements with include Macy's Inc M, Etsy Inc ETSY, Sephora, Ralph Lauren Corp RL, H & M Hennes & Mauritz AB HMRZF, IKEA, Expedia, Samsung, Peloton Interactive Inc PTON, Abercrombie & Fitch Co. ANF, Nike Inc NKE, Timberland and Alibaba Group Holding Ltd - ADR's BABA

Pre-IPO Secondary Market Opportunity? Meanwhile, Sifted, a startup-news site affiliated with Financial Times, reported late last month that Klarna shares are available at Tioex, a new Swedish investment platform. Tioex buys shares from employees and founders of private-stage tech companies to create a secondary market for its members.

However, when a Benzinga writer signed up to the service to see which companies' shares were available, it appeared no shares were immediately available. Klarna was among just four companies listed (including Tioex itself). The site asks those interested in any of these four companies' shares to fill out a short form so the interested party can be notified if private shares become available for a deal. The site also appears to require a minimum investment of $50,000.

An email sent to Tioex CEO Johan Hägglund resulted triggered an automated out-of-office reply.

Photo courtesy Klarna.