Klarna CEO wants the buy-now, pay-later giant to go public ‘quite soon’ by copying Google’s ‘perfect IPO’

Klarna Bank AB Chief Executive Officer Sebastian Siemiatkowski is taking inspiration from Google as he prepares for an initial public offering “quite soon.”

While he said Klarna hasn’t yet chosen where and exactly when it will sell shares, Siemiatkowski pointed out that the US was the buy-now-pay-later firm’s biggest market during an interview with Bloomberg TV on Friday. 

“I always look to the Google IPO and I feel that was a perfect IPO,” he said. “You had a company who had proven itself, it had proven its business model. It was a global company, but it was also a company who had the majority of its growth ahead of itself, right. And I think that that’s been the timing we’ve been looking for.” 

Google, now renamed Alphabet Inc., had a market value of $23 billion when it listed in 2004. It’s now worth almost $1.7 trillion, one of the most valuable companies in the world. 

Klarna will presumably want to avoid some of Google’s missteps in the IPO process: the internet company was forced to halve the value of the offering as the market for new issues sagged, and some shareholders had issues with the Dutch auction structure. The Securities and Exchange Commission investigated whether an interview with the founders in Playboy magazine might have violated disclosure rules.

In 2022, Klarna saw its valuation slashed to $6.7 billion from about $45.6 billion while it cut jobs, office space and other costs, as investors reconsidered the growth of easy credit at a time of rising interest rates. Recently, the firm was commanding a valuation of about $9.5 billion, according to Caplight, an aggregator of secondary market transaction data.

In November, the Swedish firm was setting up a new UK holding company in what was seen as the preparatory work for a potential public offering. Klarna has also started having detailed discussions with investment banks to work on an IPO that could value it around $20 billion, Bloomberg News reported last month. 

“It’s important that we have met the criteria that we have set up for ourselves to IPO,” Siemiatkowski said. “I hope that we will be able to make it happen quite soon.”

However, some of the firm’s existing investors disagree about the way forward. Relations between Siemiatkowski and co-founder Victor Jacobsson have soured as the two clashed over differing approaches to corporate governance. One recent flare-up during the IPO preparations centered on this push to set up a new British holding company, Bloomberg News has reported. 

Siemiatkowski said Friday he was “very happy” that Michael Moritz was still on the Klarna board after a plan to replace him was dropped. Sequoia, the venture capital firm that Moritz helped run, has backed Klarna for the past 15 years — and was also an early investor in Google. 

The company narrowed its losses to 2.5 billion kronor ($240 million) last year, with revenue rising by more than a fifth as it expanded rapidly among US shoppers looking to spread the cost of their purchases. 

Siemiatkowski said the firm now represents about 0.5% of the total payments market, giving Klarna space to grow and challenge the dominance of Visa Inc., Mastercard Inc. and others. 

Klarna recently said its tie-up with OpenAI to use artificial intelligence across the company had led to advances in customer service that could replace workers. The news hit shares in Teleperformance SE, which provides call centers.

“This is the first time we’ve launched a technology that makes the experience so much better, that it actually reduced the amount of errands and the amount of interactions with humans to the equivalent of about 700 full time agents,” Siemiatkowski said. 

When asked if he wanted Klarna to become the first AI bank, Siemiatkowski said “yes, that’s the goal. But our users will also always be able to reach a human if they want to.”

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