Klarna Reportedly Close to Choosing Goldman Sachs to Lead IPO

Klarna is reportedly ready to tap Goldman Sachs to help it go public next year.

The Swedish buy now, pay later (BNPL) company is in deliberations with the banking giant to help lead its initial public offering (IPO), Bloomberg reported late Wednesday (Aug. 14), citing unnamed sources.

Klarna was in discussions with investors last week for a share sale ahead of the IPO. The company is said to be seeking a valuation of around $20 billion when it goes public, per the report.

Spokespeople for both Klarna and Goldman Sachs declined to comment when reached by PYMNTS Thursday morning (Aug. 15).

Klarna’s IPO effort comes amid a surge in BNPL use, one that has largely been driven by younger, digitally savvy shoppers.

“This trend is particularly evident during peak shopping seasons; for instance, consumer spending on BNPL transactions reached $17 billion between November and December, marking a 14% increase from the previous year,” PYMNTS wrote last week. “This surge indicates a clear shift in consumer preference toward flexible payment options that allow for the deferral of costs without incurring significant interest.”

The appeal of BNPL comes from the payment method’s seamless and user-friendly nature. Customers appreciate the convenience of managing payments in small installments, which helps alleviate financial strain during uncertain economic times.

“Despite this popularity, there are areas for improvement; a portion of BNPL users desire lower fees and enhanced application processes,” the PYMNTS report added. “This presents an opportunity for both FinTechs and traditional banks to refine their offerings and capture a larger market share.”

Meanwhile, the PYMNTS Intelligence report “Redefining Retail: Consumer Finance Trends Driving the Evolution of Pay Later Plans” found there is a higher rate of adoption for BNPL offerings among people facing economic challenges. Twenty-six percent of those who live paycheck to paycheck with trouble paying their bills said they were very or extremely likely to use BNPL over the next 12 months. Twenty-one percent of those who live paycheck to paycheck without difficulties covering their bills said the same.

“For consumers not counting on their next paycheck to get by, that share dropped,” PYMNTS wrote earlier this month. “Only 10% of those who do not live paycheck to paycheck reported that they expected to use BNPL in the next year.”