Summary
Klarna, the fintech company known for its Buy Now Pay Later (BNPL) business model, is now officially a listed company on the New York Stock Exchange. The IPO aims to raise around $1.27 billion, with most of these funds to be used for further AI integration and to increase its credibility amongst investors as a ‘global digital bank and flexible payments provider.’
Breakdown
Initial Public Offerings (IPOs) are when a company sells its shares on a public stock exchange for the first time. Before an IPO, the company’s shares are generally owned by its founders and early investors. IPOs offer the company a chance to raise considerable funds and allows keen investors to own a part of the business. When a company becomes a public company, it is subject to stricter legal and regulatory requirements.
According to a press release by Klarna published on Tuesday 2 September, over 34 million shares will be available to buy as ordinary shares under the symbol “KLAR”. 28.8 million of these shares were offered by existing shareholders and the remaining 5.55 million by Klarna itself. This means that around 80% of Klarna’s existing shares come from shareholders which some market commentators view as an unusual mix.
The Business Case
The BNPL sector has faced regulatory scrutiny in the past but Klarna is now trying to broaden its horizons by repositioning itself as a competitor to global banks. Klarna’s UK financial services arm received a licence from the Financial Conduct Authority in July 2025, allowing it to offer debit cards and various fund management functionalities to its customers. Its aim is to ‘disrupt traditional retail banking’ and provide more for users such as cashback features. With the New York IPO, the fintech company aims to gradually return to its record $45.6 billion valuation from 2021 and use the funds to diversify its financial services model to appeal to an even larger customer base.
Legal Team Involvement
Davis Polk & Wardwell LLP advised Klarna on the IPO while Latham & Watkins LLP acted for the underwriting syndicate which included the likes of Goldman Sachs and J.P. Morgan. An underwriting syndicate is a group of investment banks and brokers which oversees the IPO process by selling shares to investors. Below are some of the key legal teams and practice groups which are usually involved in IPOs of this size, acting for the issuer and the underwriting syndicate:
Issuer:
- Capital Markets: largely responsible for drafting and negotiating offering documents such as the prospectus and the underwriting agreement.
- Public Company Advisory: assisting Klarna on its continuing disclosure obligations and compliance with US securities laws.
- Corporate Governance: refining Klarna’s governance policies and structures to make it suitable for a newly listed company.
- Finance/Financial Institutions: ensuring Klarna’s developing banking services comply with existing regulation and current or future licenses.
Underwriting syndicate:
- Capital Markets: advising on the Securities and Exchange Commission (SEC) registration statement, undergoing due diligence on each investment bank and ensuring the syndicate carries out its legal duties.
- Public Company Representation: protecting the underwriters from liability by making sure all disclosures made by the issuer comply with US laws.
- Fintech: requesting risk disclosures from Klarna to ensure it continues to comply with fintech regulations.
- Tax: ensuring that the IPO process is tax-efficient and does not violate any US or Swedish tax rules.
Future Outlook
Klarna still has a long way to go to returning to its 2021 peak. However, the New York IPO should help consolidate its position in the global fintech market which it can use as leverage to develop its other banking services and grow its reputation amongst investors and stakeholders. If the IPO raises the required funds, Klarna’s growth prospects in the wider banking sphere could lead to greater innovation and a competitive boost.