Friday 21 May 2021 2:54 pm

Klarna mulls London stock market float after post-Brexit listing revamp

Klarna is weighing up a potential stock market float in London, but has said its decision will rest on changes to listing rules in the capital after Brexit.

Chief executive Sebastian Siemiatkowski said London had the opportunity to strengthen its reputation as a global financial hub by attracting more fintech firms and banks.

“As Brexit has happened, it gives London an opportunity to write even better regulations for the financial sector. That is going to benefit London standing outside of the EU… People expected all the banks will move away [from the UK]; I think it’s the opposite,” he told the Financial Times.

The Klarna boss said his company was considering an initial public offering in London, but said markets were “extremely overheated” and stressed he was in no rush to go public.

The ‘buy now pay later firm’, which at $31bn is Europe’s most valuable privately-owned fintech, is considered the white whale of potential listings and is being courted by bourses around the world.

The Swedish company has previously hinted that it would favour a direct listing in New York.

But the overtures towards London come as the government looks to attract more tech IPOs in the capital. A recent review by Lord Hill outlined proposed changes to the UK’s listing regime designed to maintain London’s competitiveness.

These plans suffered a major setback following the disastrous London debut of Deliveroo, which saw its shares plunge by a third in a dismal first day of trading.

But Siemiatkowski said his company had been in talks with ministers, who had a “keen interest” in attracting fintechs.

The Klarna boss added that he favoured risk-based regulation over prescriptive rules, particularly in areas such as know-your-customer checks, anti-money laundering and privacy.

Despite the buzz about its potential IPO, Klarna is facing increasing scrutiny over criticism that its ‘buy now pay later’ (BNPL) model encourages younger customers to rack up unsustainable debts.

Companies such as Klarna and rival Clearpay have enjoyed rapid growth due to their popularity among millennials shopping on sites such as Asos and JD Sports.

City watchdog the Financial Conduct Authority has drawn up plans to crack down on BNPL companies after the use of these transactions tripled last year.

The UK Advertising Standards Authority has also censured Klarna over adverts promoted by Instagram influencers after ruling they “irresponsibly encouraged the use of credit to improve people’s mood”.

Siemiatkowski accepted that regulation for BNPL firms was needed, but said “there must be some end to our responsibility”.

“If people want to regulate against buying more than four sweaters a year online then fine… [but] there’s a limitation to how much we can do,” he said.