Swedih fintech Klarna has signed a strategic, multi-year agreement with a subsidiary of funds advised by Elliott Advisors (UK) Limited for the on-going sale of substantially all of Klarna’s short-term, interest free product receivables in the UK. Klarna will still own all consumer-facing activities, including underwriting and servicing. The Financial Times earlier reported on the deal.
Over the past three years, Klarna which has a banking license in its home country of Sweden, has been building an efficient and robust capital offloading platform to support its compounding network growth. This partnership represents the latest addition to these platform capabilities, allowing Klarna to fund over £30B of volume through the life of the transaction.
“This is a unique deal, designed to support Klarna’s global growth as we continue on our journey to become the commerce network for the next generation. By efficiently managing our assets, we can deploy shareholder equity more effectively to meet the growing demand for Klarna’s products and services for both consumers and merchants globally,” said Niclas Neglén, Chief Financial Officer of Klarna.
The buy now, pay later giant has grown substantially in the UK, with ten million British consumers having used the service in the past 12 months. The number of retailers offering Klarna in the UK leapt by 33% in the past year to over 40,000.
The company is targeting next year for its initial public offering (IPO) and has reportedly held talks with investors about a share sale before going public, seeking a valuation in the neighborhood of $20 billion.
Klarna cut its overall employee headcount by roughly 24% to 3,800 in August and has attracted headlines in recent months due to commentary from its CEO Sebastian Siemiatkowski about using artificial intelligence to help reduce headcount.
The deal with Elliot echoes a similar arrangement that private equity firm KKR & Co. struck with payments company PayPal Holdings Inc. last year to purchase as much as €40 billion of buy-now-pay-later loan receivables that the tech firm originated in France, Germany, Italy, Spain, and the UK.
