Klarna now the biggest fintech in Europe and 2nd biggest in the world after new raise at $45.6 billion valuation

Buy now, pay later consumer spending lender Klarna has been valued at $45.6 billion in a new capital raise less than three months since it last went to investors in March. The most recent valuation means Klarna is the second most valuable fintech in the world after only payments company Stripe and Europe’s most valuable. The Swedish start-up is now worth more than Barclays.

The new capital raise also saw Klarna’s valuation leap by $14 billion compared to March with existing investors led by Softbank happily snapping up $639 million of freshly issued equity at higher prices than they paid less than 3 months earlier.

Klarna offer consumers the option to pay for items purchased online in instalments. It’s become a popular way to buy clothes, electronics and furnishing. Travel companies have also more recently started to use the service. Klarna pays the seller in cash upfront, charging them a fee of between 2% and 6% and then collects the sum from the buyer over the next one to two months.

The fresh capital raised, which is added to the $1 billion attracted in March, will fund accelerated international expansion. Sweden-based Klarna launched in France this week and moves into Canada next week with a presence in at least two more major markets planned before the end of the year.

The justification for the quickfire leap in valuation is being attributed to the fintech’s outstanding rate of growth in the USA. It doubled its customer numbers from 8.5 million to 17 million over the 12 months to the end of April. Klarna says it currently has around 90 million active users in total and now handles over 2 million transactions a day.

Until the recent growth spurt in the USA, the UK, where Klarna says it has 15 million customers, was the start-up’s biggest market. However, continued growth in the UK may be hampered by a March announcement by the Financial Conduct Authority, the financial services regulator, that it plans to bring the buy now, pay later market under its oversight. Until now the market has been unregulated but there are concerns services like Klarna’s could pull vulnerable consumers into debt.

The company is still loss making and finished last year $166 million in the red but that is down to its rate of international expansion. A Wall Street IPO is expected to see the company go public within the next one to two years, though a SPAC merger is also thought to be a route to listing being considered.