Analysis-Klarna IPO filing spurs hope of British fintech listings

LONDON (Reuters) - Klarna's upcoming U.S. initial public offering could help unlock a pipeline of British fintech flotations after a barren period for new technology listings, investors, lawyers and an executive told Reuters.

  Stockholm-headquartered Klarna, best known for its buy-now pay-later products, publicly filed to float on the New York Stock Exchange earlier this month in its second attempt at listing on the public markets in four years.

It had looked to IPO in 2021, after shooting from a valuation of $5.5 billion to $45.6 billion in three funding rounds. But investors soured on tech companies as interest rates rose and economies stuttered, and the company was forced to cut its valuation to $6.7 billion in a 2022 fundraising.

Now it is back, and could be worth at least $15 billion in an IPO likely to be priced in the first half of April, one person with knowledge of the plans said.

"Any successful IPO of a high-profile business in the sector will be a catalyst for others to look again at an IPO as a strategic option for growth and/or liquidity," said James Wootton, a partner at Linklaters, who advised money transfer company Wise on its 2021 listing in London.

  At the peak of a post-pandemic fundraising boom in 2021, 101 fintech companies raised $296.86 billion via IPOs on global stock markets, according to data from PitchBook, compiled for Reuters. But between 2022 and 2024, just 86 firms raised $32.76 billion via IPOs.

  Klarna's plans have fuelled hopes of a resurgence.

"It's quite clear that the market is looking to Klarna as a bellwether for future fintech IPOs, many of which are in a long pipeline," said Tim Levene, chief executive of London-listed fintech investment fund Augmentum.

"We hope that Klarna is the first of many to list, which will prove a positive data point for the rest of the market."

WAITING IN THE WINGS

Challenger banks Monzo and Starling, as well as payments companies Zilch and Ebury, are among the fintech companies considering plans to list at some point in the future, sources close to the companies told Reuters.

  Zilch, which offers a competing buy-now pay-later product to Klarna, is currently aiming to float in 2026, Philip Belamant, its chief executive, told Reuters.

  "The Klarna IPO will be a significant moment for the fintech sector, and we'll be watching closely," he said, adding that a successful IPO could "set the stage for greater investor confidence in European fintechs going public".

  Ebury, a Spanish-founded payments company majority owned by Banco Santander, is gearing up for a London listing by June at the earliest, one person familiar with knowledge of its plans said.

The company will likely seek a valuation of around 2 billion pounds ($2.6 billion), the person said, adding the timing would depend on market conditions.

Ebury did not respond to a request for comment. Santander declined to comment. It has said in the past that listing Ebury was one of many alternatives for the business.

Britain's Revolut has previously signalled its intention to list publicly. A spokesperson for the challenger bank, Britain's most highly-valued startup, declined to comment on specifics.

"Our focus is not on if or when we IPO, but on continuing to expand the business, building new products, and providing better and cheaper services to serve our growing global customer base," the person said.

Zopa, which is headquartered in London, has no firm timeline for an IPO, a spokesperson said. "We continue to plan towards an eventual IPO, preferably in the UK and can be ready in a short time, however we will wait for the right macroeconomic and market conditions," the spokesperson said.

To be sure, many have raised money and can wait, and conditions are volatile, forcing some European companies to put IPOs on hold.

"A lot of them (fintech companies) have the luxury of being able to choose their time," said Patrick Evans, head of UK equity capital markets at Citi.

The choice of the U.S. venue by Klarna is also likely to intensify debate over where these fast-growing companies should list.

Monzo has discussed floating in Britain or the U.S. but has set no firm timeline or venue for an IPO, a person familiar with the company's plans said.

The London Stock Exchange ( LDNXF ) has been making overtures to fintech companies including Zilch, one person familiar with the matter said. Zilch has yet to choose a venue, the person said. The London Stock Exchange Group ( LDNXF ) declined to comment.

($1 = 0.7747 pounds)

(Reporting by Charlie Conchie. Additional reporting Jesus Aguado. Editing Anousha Sakoui and Mark Potter)