Klarna Mulls London IPO, Waits on UK Regs

Klarna Mulls London IPO, Waits on UK Regs

May 20, 2021

Klarna Bank, parent company of Buy Now Pay Later (BNPL) pioneer Klarna, is mulling an IPO bid on the London Stock Exchange, but said whether or not it goes forward could depend on how post-Brexit U.K. regulates financial services, according to a Bloomberg News report.

CEO Sebastian Siemiatkowski has also signaled that the company could choose to be listed in New York in any bid to go public.

“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.

BNPL is a form of credit offered at the online point of sale that enables consumers to make purchases and pay the balance off periodically. It is growing rapidly in many places, especially in the wake of Covid-19 as consumers look for alternative ways to finance the purchases they need.

Last February, the U.K.’s Financial Conduct Authority (its main financial regulatory body) issued a report on Buy Now Pay Later saying it will consider regulating the sector.

After a four-month review, the FCA reported that, while increased access to unsecured credit was a worthy goal, the explosive growth of BNPL without adequate guardrails is getting consumers into financial trouble.

“BNPL products which are currently exempt from regulation should be brought within the regulatory perimeter as a matter of urgency,” the FCA said in the report. “The use of BNPL products nearly quadrupled in 2020 and is now at £2.7 billion ($3.7 billion), with 5 million people using these products [in the U.K.] since the beginning of the coronavirus pandemic. The emergence and expansion of unregulated BNPL products gives consumers a significant alternative to more expensive credit, but this also comes with significant potential for consumer harm.”

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