Klarna’s IPO pops, raising $1.4B, with Sequoia as the biggest winner

Summary

It’s been a long road for the 20-year-old fintech Klarna to make it to an IPO. But on Wednesday, the company successfully landed on the New York Stock Exchange, having raised $1.4 billion, largely for its existing investors, rather than itself. The fintech giant sold shares at $40, above its announced range of $35 to $37, and came out of the gate with a $15 billion valuation. Shares popped, opening at $52, though quickly settling down to around $46 mid-day. Of the 34.3 million shares Klarna sold, only 5 million were sold by the company, it said. The rest were sold by existing investors like the company’s largest shareholder Sequoia Capital. Entities controlled by Dutch billionaire Anders Holch Povlsen, Silver Lake, BlackRock, and many others sold as well. Despite cashing out some shares, all of them are holding onto the majority of their stakes. Figma’s IPO did a similar thing. Yet, often these existing investors don’t want to sell at the IPO price, a VC told TechCrunch. They kick in shares to help the company meet IPO demand. Floating more shares helps the company obtain a more accurate, and perhaps higher, valuation out of the gate because it helps the IPO attract the biggest institutional investors who wouldn’t bother with an IPO for a small allocation. In Klarna’s case co-founder CEO Sebastian Siemiatkowski did not sell any shares. His stake was worth $1.02 billion at the IPO selling price of $40 and he controls about 7.5% of the company. Victor Jacobsson, the co-founder who left the company in 2012, did sell but was, and still is, a slightly larger shareholder. He cashed out of 1.1 million shares and still retains over 8% of the company. Co-founder Niklas Adalberth still owns just under 3 million shares, Klarna disclosed. Sequoia is by far the biggest investor in Klarna, controlling nearly 23% of the company. Famed VC Michael Moritz wrote Klarna’s first check on Sequoia’s behalf in 2010, and stayed on as Klarna’s chairperson even after he left Sequoia in 2023. ...