Chrysalis raises Klarna valuation ahead of fintech’s planned IPO

Chrysalis raised the valuation it assigns to its stake in Klarna as the buy-now pay-later (BNPL) giant gears up for a hotly-ancitipated IPO next year.

In a trading update, the London-listed investment trust upped its valuation of the Swedish fintech to £120.6m as of 30 September, compared to £100.3m three months prior.

Analysts at Deutsche Bank said the move gave Klarna an implied valuation of around $14.6bn. Klarna declined to comment on the valuation.

That would be a significant improvement from Klarna’s last official price tag of $6.7bn in a 2022 funding round but still well below the $45.6bn valuation it secured in 2021.

Higher interest rates triggered a drop-off in venture capital dealmaking and rethink in valuations after 2021, although this year has seen signs of improvement.

Chrysalis said its improved valuation was driven by increases in the share prices of Klarna’s publicly listed peers. These include fellow BNPL providers Affirm and PayPal, both of which trade on the Nasdaq.

Klarna has reportedly spoken to a number of Wall Street banks about a possible New York IPO that could come as soon as the first half of next year. It is said to have considered seeking a valuation of around $20bn in its stock market debut.

“We are also expectant of a Klarna IPO in due course; the next potential window for this would appear to be the first half of 2025,” Chrysalis said.

“This would further boost the company’s liquidity and, if market rumours around IPO valuation prove to be correct, lead to further net asset value per share accretion.”

The investor said it could generate around £200m of potential liquidity and return £100m to its shareholders from the combination of a Klarna IPO and Visa’s acquisition of London-based payments protection firm Featurespace.

Chrysalis’ update comes shortly after Klarna’s shareholders voted to oust Mikael Walther from the firm’s board of directors following a clash with chair Mike Moritz and chief executive Sebastian Siemiatkowski.

Earlier this month, Klarna struck a deal to sell off its UK loan book to hedge fund Elliott to free up some £30bn for its global growth plans.

Elsewhere, Chrysalis slightly lowered the valuation of its Starling Bank stake to £254.4m from £258.9m.

It is the second largest shareholder in the London-based digital bank, which was valued at £2.5bn in a 2022 funding round.

Chrysalis noted the Financial Conduct Authority’s £29m fine earlier this month over failings related to Starling’s financial crime controls between December 2019 and November 2023.

The investor cited “extensive additional safeguards” introduced by the bank to ensure it complies with regulation. City AM approached Starling for comment on the valuation.