Klarna, the buy now pay later (BNPL) finance giant, has cleared a crucial hurdle on its journey towards a stock market flotation expected to value it at as much as $20bn (£15.9bn).
Sky News has learnt that the Stockholm-based consumer credit provider has secured backing from shareholders and regulators to establish a new UK-registered holding company.
Investors were informed earlier this week that the approvals, part of preparations for a high-profile initial public offering (IPO), would result in the exchange of their shares in Klarna Holding for Klarna Group plc stock taking place in about ten days' time.
Investment banks have yet to be appointed for a New York flotation, with people close to the company saying that the first quarter of 2025 - after the next US presidential election - now looked to be the likeliest window for it to take place.
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Sky News revealed last year that Klarna was setting up a new British holding company to smooth the path to a public share sale.
The company, which employs about 5,000 people and boasts more than 150 million customers globally, has been examining the move for some time.
Its founder and chief executive, Sebastian Siemiatkowski, said in January that it was expected to take place "quite soon".
The decision to establish a holding company in Britain reflected the UK's standing from a legal, regulatory and capital markets perspective, sources said last year.
Nevertheless, its listing in the US will be a disappointment to the London Stock Exchange, which had been pushing for Klarna to float in the UK.
Klarna was forced to slash its valuation to $6.7bn (£5.3bn) in a funding round in 2022, having once been valued at $46bn (£36.6bn) and drawn backing from investors such as SoftBank's Vision Fund, Sequoia Capital and Mubadala, the Abu Dhabi sovereign wealth fund.
Bankers believe that based on a comparison with New York-listed peer Affirm Holdings, Klarna should attract an IPO valuation of between $15bn and $20bn.
Klarna's corporate reorganisation comes after the UK government appeared to veer away from a crackdown on the BNPL sector.
Sky News revealed last July that ministers were planning to shelve new legislation to regulate providers such as Klarna, with future rules instead incorporated into a reformed Consumer Credit Act.
Consumer campaign groups responded with fury to the decision, which has still to be announced by the government.
Last autumn, the Financial Conduct Authority said it had secured contract changes for BNPL customers after an explosion in the use of such products.
Research published by the City watchdog showed that 27% of adults - roughly 14 million people - had used BNPL at least once in the second half of 2023.
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Tap hereKlarna has previously declared itself in favour of "proportionate" regulation of the sector.
Klarna launched last year what it described as Britain's first 'credit opt-out' product to give consumers greater control of their finances.
It said the idea had been suggested by Andrew Griffith, the then City minister, during a meeting with Mr Siemiatkowski.
A Klarna spokesperson told Sky News on Tuesday: "Following our announcement last year, yesterday we notified investors that we have received the necessary investor and regulatory approvals necessary to set up a new UK-based holding company."
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