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Klarna takes the long road to IPO



When a start-up IPOs, it is often the culmination of a frantic period of growth.

But, assuming that Klarna pulls the trigger on a stock market listing in the next one or two years, it will be more than 15 years after the Swedish fintech and bank launched.

The “buy now, pay later” company was started by a trio of business school friends in Stockholm in 2005 and sought to bring invoicing — still common among consumers in the Nordics — into the world of digital shopping.

Klarna has since expanded out of the Nordics to Germany, the UK and Australia as well as the US, the most crucial part of its pre-IPO preparations.

Slowly the pieces are falling into place. In the past three months alone, Klarna has raised $650m in fresh capital at a valuation of $11bn; launched a partnership with US department store Macy’s; and, most recently, revamped its board including the addition of Silicon Valley veteran Sir Michael Moritz as chairman.

Sebastian Siemiatkowski, Klarna’s chief executive and one of its co-founders, is still coy about any potential timing. He has said that an IPO is likely in the next couple of years, but that the latest funding round could buy the company more time to stay private.

In any case, Mr Siemiatkowski is clear that growth in the US is the priority. So ferocious has been the pace of its expansion that the fintech — which had been profitable ever since it started — made its first ever annual loss last year.

He also hinted that its move into retail banking in Europe — it was the continent’s first large fintech to get a banking licence in 2017 — could be replicated in the US. He has previously said he wants to become the “Ryanair” of banking, disrupting incumbents worldwide.

There are undoubtedly challenges ahead of an IPO. Klarna says it makes most of its money by charging merchants fees. But it still makes money in some countries by charging customers for late payments, which critics argue fuels irresponsible spending, particularly among young people. The payment deferral programme has become so ubiquitous that “to klarna” has become a verb for some UK shoppers.

Klarna last week said it wanted to be regulated in the UK by the Financial Conduct Authority, and would start to report missed payments to credit reference agencies.

Credit losses in the first nine months of this year jumped by about a third compared with the same period in 2019, a similar rise to that in revenues.

Mr Siemiatkowski has shown previously that he can be far more patient than the typical start-up founder, working hard to get his product right. Potential investors in a Klarna IPO can expect the same, long build-up to any listing.

Quick Fire Q&A

Company name: Kneip

When founded: 1993

Where based: Luxembourg

CEO: Enrique Sacau

What do you sell, and who do you sell it to: We provide fund data management solutions, regulatory reporting and consultancy services to the asset management community.

How did you get started: Founder Bob Kneip launched the company in 1993 as an agency specialising in the production of annual reports for businesses.

Amount of money raised so far: N/A

Valuation at latest fundraising: N/A

Major shareholders: Founder Bob Kneip and management.

There are lots of fintechs out there — what makes you so special: We offer a unique blend of technology, regulatory expertise and a service trusted by asset managers for more than 27 years.

Further fintech fascination

Wirecard fallout: The Financial Times reports that Germany is to probe the head of the audit watchdog after he admitted to buying and selling shares in Wirecard while his own institution was investigating the company’s auditor. Also, documents seen by the FT show that Deutsche Bank and Commerzbank provided funding for Wirecard’s acquisition of a pair of Indian companies referred to in the fraud allegations against the fintech group.

Follow the money: Sweden’s Tink, which runs open banking platforms, has raised €85m in a funding round that gave it a valuation of €680m, says TechCrunch. The company links up 3,400 banks covering 250m people. The latest funding round was backed by Eurazeo Growth, Dawn Capital, PayPal Ventures, ABN Amro Ventures and BNP Paribas’ venture arm.

New frontiers: Sifted reports that the UK fintech sector has launched a new lobby group, Fintech Founders, to ensure that its voice is better heard by the government. The founders fear that the start-ups are losing out to the financial services establishment when it comes to arguing their case in the corridors of power.

Crypto chronicles: US insurer MassMutual has joined the ranks of Bitcoin enthusiasts, reports the Wall Street Journal. The newspaper says that MassMutual bought $100m of the digital currency for its $235bn general investment account. The insurer said it was part of a strategy to take advantage of new opportunities.

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South Korean video game group behind hit ‘PUBG’ aims for $5bn IPO




The company behind global hit game PlayerUnknown’s Battlegrounds plans to raise up to Won5.6tn ($5bn) in an initial public offering that is expected to be South Korea’s largest ever.

Krafton said in a regulatory filing on Wednesday that it will sell more than 10m shares at Won458,000-Won557,000 each, with the top end of that range giving it a market capitalisation of Won28tn. The IPO price will be set on July 9 ahead of the company’s listing in Seoul on July 22.

The much-anticipated listing is likely to top that of Coupang, the leading South Korean ecommerce company that raised $4.6bn in New York in March.

Krafton, formerly known as Bluehole, was founded by Chang Byung-gyu in 2007. PUBG, a so-called battle royale game in which players fight to the death on a remote island, was released in 2017 and accounts for the bulk of Krafton’s revenues. The game has sold more than 75m copies across PC and consoles, while its mobile version has been downloaded more than 1bn times. Krafton’s operating profit more than doubled to Won774bn last year as sales jumped more than 50 per cent to Won1.67tn.

However, the company cited uncertainty in overseas expansion and domestic regulation as investment risks.

“Despite our successful experience in entering overseas markets, our past experience does not guarantee our future success given the different language, culture, custom and legal, regulatory environment,” Krafton said in its filing.

South Korea is on track for a record year for IPOs on huge retail investor interest. The benchmark Kospi index is trading near all-time highs, buoyed by ultra-low interest rates and the country’s strong economic recovery from Covid-19. Investment bankers have predicted that proceeds from IPOs will more than quintuple to at least Won25tn in 2021.

Other IPOs in the pipeline include LG Energy Solution, the world’s largest electric vehicle battery maker, which is expected to raise Won10tn-Won15tn in September. Hyundai Heavy Industries, a shipbuilder, is likely to raise $1bn-$1.5bn in August. Smaller deals include the IPOs of Kakao Pay and Kakao Bank, units of the country’s dominant messenger service provider.

“The Krafton IPO will be popular among investors, given investors’ growing interest in new growth areas such as EV batteries, games and online businesses,” said an investment banker close to the deal. “But the company is heavily reliant on just one game and it is uncertain how long the game’s popularity will last.”

Some analysts have raised concerns about Krafton’s high valuation based on its IPO pricing.

“Krafton’s valuation seems stretched, considering that its market cap will surpass NCSoft’s, although NCSoft is making more money than Krafton,” said a local analyst referring to one of the company’s competitors.

Krafton plans to use the IPO proceeds to develop new games, acquire other developers, enter markets including India and the Middle East and invest in technologies such as artificial intelligence.

After the IPO, Chang will hold a 14 per cent stake, followed by Chinese internet group Tencent with 13.2 per cent, according to company filings.

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IPOs / FFOs valued at £775m in London IPO




Shares in fell 8 per cent despite the company pricing them at the bottom of their range in its initial public offering on Wednesday, giving the online furniture retailer a market capitalisation of £775m.

The listing follows the recent debuts in London of online greeting card group Moonpig and vintners Virgin Wines, which have accelerated sales thanks to stay-at-home consumers buying online during the coronavirus pandemic. Both those groups’ shares remain well ahead of their IPO prices.

Deliveroo’s £7.5bn IPO was branded one of the worst In London’s history, however, after its shares — already priced at the bottom end of the range — fell as much as 30 per cent in initial dealings. They remain more than a third below their IPO price.

“It’s a bit disappointing,” said one banker not involved in the IPO, adding that the 200p a share pricing was “some way below the levels that had been talked about”.

Valuations of up to £1bn had been mooted in the run-up to the listing.

“It’s got a large addressable market and a lot of share to go for, but historically it has wrestled with achieving profitability and scale in the UK market and it has gone ahead and pushed into international markets despite that,” the banker added. sold 50m new shares in the IPO, raising £100m, while existing investors including co-founder Ning Li and Brent Hoberman sold 46.9m shares. A further 14.5m shares could be made available as part of the overallotment option. If exercised, that would increase the number of shares to 111.5m and 29 per cent of the issued share capital.

The shares traded conditionally in London on Wednesday, while full dealings will begin on Monday.

The homewares group aims to quadruple annual sales to £1.2bn by the end of 2025. The company has said it plans to invest proceeds from the IPO in marketing and supply chain improvements aimed at reducing the time between customer orders being placed and goods being delivered.

“The IPO is an exciting milestone for Made,” said chief executive Philippe Chainieux. “A listing in London, where the business was founded, will enable us to accelerate our growth.” generated £315m in sales last year. The group, founded by entrepreneurs Ning and Hoberman in 2010, sells to about 1.2m active customers in the UK, Germany, Switzerland, Austria, France, Belgium, Spain and the Netherlands and plans to expand beyond Europe.

After admission, growth-focused investors Level Equity and Partech will be the largest investors in the group, holding 14 and 11 per cent respectively, followed by companies linked to Ning with 8.8 per cent.

Fund management groups Majedie, Axa and NFU Mutual will also be top-10 shareholders, while a vehicle controlled by Hoberman will own 5.5 per cent.

The float is the latest in an increasingly active IPO scene for so-called digitally native businesses.

Victoria Plumbing is due to float on London’s junior market early next week, with pricing details expected on Thursday, while shares in German online fashion retailer About You began trading in Frankfurt on Wednesday and Berlin-based online optician Mister Spex announced its intention to float on Monday.

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Hong Kong tycoon Richard Li’s FWD to raise up to $3bn in US IPO




FWD, the Asian insurer founded by the son of Hong Kong tycoon Li Ka-shing, has filed for a US initial public offering in what would be one of the year’s biggest listings.

The company launched by Richard Li in 2013 said on Thursday the number of American depositary shares to be offered and the price range for the IPO had not yet been determined and the timing of the listing was subject to regulatory approval. But the company could seek $2-3bn from the share sale, according to people familiar with the situation.

FWD has expanded aggressively across Asia, rapidly rolling out a network across 10 countries including Japan, the Philippines, Vietnam, Singapore, Malaysia, Thailand and Cambodia.

The insurer has almost 10m customers, more than $63bn in assets and about 6,100 employees as well as 33,000 agents.

Richard Harris, a fund manager at Hong Kong-based Port Shelter Investment Management, said FWD “has made enormous gains [in market share] because it’s got a lot of firepower behind it”.

As with Li Ka-shing’s Cheung Kong conglomerate, FWD “takes a strategic view on industries and invests very heavily in them”, Harris said.

He added that it was “interesting” that the insurer had chosen to list in New York over Hong Kong, but US investors “will be interested [in FWD] and there does seem to be a slight thawing with the view towards Chinese companies — and this will be recognised in New York as a Chinese company”.

Li started FWD with the $1.2bn acquisition of ING’s pension and insurance businesses in Thailand, Hong Kong and Macau. The expansion strategy of Huynh Thanh Phong, FWD’s chief executive, has focused on pairing moves into new Asian markets with the use of technology to reduce the paperwork and complexity common to the industry in the region.

The group has swallowed up competitors as rival financial groups have retreated from the region, including MetLife’s Hong Kong business and the insurance business of Thailand’s Siam Commercial bank, the industry’s largest-ever takeover in south-east Asia.

“[SCB was] the prize asset that everybody wanted to go after,” Phong told the Financial Times in an interview this year. FWD eventually acquired SCB for about Bt93bn ($3bn) in 2019, giving it a 36 per cent market share in Thailand in bancassurance terms, bigger than the next three groups combined.

FWD has submitted a confidential filing for the IPO to the US Securities and Exchange Commission. That will allow it to submit other documents confidentially to the SEC before filing a prospectus publicly.

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