Klarna global boss doubles down on UK investment despite regulation uncertainty
Buy-now pay-later giant Klarna will double down on a UK investment drive despite lingering uncertainty around a clampdown on the sector by regulators this year, its global chief has pledged.
Sebastian Siemiatkowski, founder and chief of the Swedish fintech, told City A.M. that the UK remained a key market for the firm despite a push from regulators for firmer rules around the deferred payment tools.
The timelines and eventual framework for planned rules on buy-now pay-later products, which allow shoppers to split up and defer payments, have also been thrown into doubt after ministers reportedly shelved plans over the summer for fear of dissuading investment.
Speaking with City A.M., Klarna’s global chief committed to continue pumping cash into the market despite the cloud of uncertainty now hanging over its regulatory status.
“You know when Brexit was about to happen, you know I didn’t want you guys to leave and I really miss you guys. I have to say at the same time I find Britain the most amazing entrepreneurial, ambitious, aspirational place,” he said.
“The people that work in Britain are fantastic. So we are going to continue to invest in Britain.”
Siemiatkowski added that the firm was “very optimistic about” the UK, where there was “an amazing tech and finance sector with a lot of knowledge and deep understanding of banking services, retail banking”.
The UK is Klarna’s third largest market outside Germany and the US. The firm generated 1.2bn SEK (£86m) from the country in the six months to June.
In its half year report last week, bosses said the US and UK played a “pivotal role” in pushing up its global merchandising volumes 14 per cent on last year.
Ministers and regulators have been looking to rein in the sector over the past two years, however, amid fears of a looming debt crisis as shoppers take on unregulated debt through a cost of living crunch.
Plans to bring the sector within the remit of the Financial Conduct Authority were initially tabled in 2021 but the process has been beset by delays. Ministers are also now also set to kick the regulation into next year, Sky News reported.
The pledge to double down on UK investment comes amid a major push towards profitability for Klarna after the firm was caught up in the global tech downturn last year.
Klarna cut some ten per cent of its staff and was forced to slash its valuation by 85 per cent to $6.7bn last year in order to raise cash, as investors soured on loss-making start-ups.
The firm revealed last week that the cost-cutting drive had borne fruit as it closed its losses to SEK 2.115bn (£153m) in the six months to the end of June from SEK 6.37bn last year, as well as touching monthly profitability for the first time.
The swing into the black has triggered speculation that the firm may have reignited its IPO plans after delaying the move amid a tech sell off on the public markets.
Siemiatkowski told City PM the “requirements have been met” but the firm was now waiting for markets to settle before rekindling the plans.
He added that no plans had been made on a destination for the float.
“It’s really too early to say. You know it’s very flattering that you have all these countries who want us to list with them,” he said.
“You know, I have the Swedes who think we should do it in Stockholm, then there’s the US which is the biggest market for us and of course there’s London which is a really important market for us as well. But it’s really too early to say.”