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Sweden-based global payments and shopping services firm Klarna has closed a $800 million financing round supported by UAE's Mubadala Investment Company and Canada Pension Plan Investment Board (CPP Investments) along with existing investors Sequoia and Silver Lake.
However, the valuation of the high-profile startup has been lowered to $6.7 billion in its latest financing round down around 85% from the $45.6 billion valuation it achieved in 2021.
Announcing the $800 million financing in a series of tweets, Sebastian Siemiatkowski, CEO of Klarna said: "We are not immune to public peers being down 75-90% and hence our valuation is down on par."
"Klarna has been profitable for its first 14 years of existence. 2017 = 14% EBT. Our established markets currently generate 1 bn in gross profit per year. Since 2019 we have invested to become US market leaders with 30 m users, 60% brand aware. and 30 of top 100 US sites," he tweeted.
"As investor sentiment shifts it is time to return to profitability. But now we are doing so on a global platform, 150 m users, over 20 markets and 400,000 partners. We don't do preferential shares only common stock. Other private startups fundraise and valuations are not comparable," Siemiatkowski tweeted.
UAE's sovereign wealth fund Mubadala manages assets over $284 billion and Canada's CPP Investments manages assets of more than C$539 billion.
Klarna now plans to allow all its more than 1000 smaller shareholders to participate on a pro-rata basis in a process that will continue for the coming few weeks.
Michael Moritz, Partner at Sequoia, said: “The shift in Klarna’s valuation is entirely due to investors suddenly voting in the opposite manner to the way they voted for the past few years. The irony is that Klarna’s business, its position in various markets and its popularity with consumers and merchants are all stronger than at any time since Sequoia first invested in 2010."
"Eventually, after investors emerge from their bunkers, the stocks of Klarna and other first-rate companies will receive the attention they deserve,” he added.
Klarna has been backed by Sequoia Capital since 2010.
(Reporting by Seban Scaria; editing by Daniel Luiz)
