Klarna Strikes $6.5 Billion Loan-Sale Deal With Elliott Funds To Fuel US Growth

• From October onwards, Klarna would be able to sell newly originated Fair Financing loans to funds managed by Elliott on a rolling basis.
• The company said that the Fair Financing gross merchandise value has grown by 139% globally, and 244% in the U.S., over the past year.
• The company made its debut on the New York Stock Exchange in September, with its shares rising 33% at the time of listing.

Klarna Group Plc. (KLAR), on Tuesday, announced that it inked a deal with Elliott Investment Management to sell up to $6.5 billion of its loans to funds managed by the U.S.-based investment firm.

Detailing the terms of the agreement with Elliott, Klarna announced in a statement that it will be able to sell its existing Fair Financing portfolio partially. From October onwards, it would be able to sell newly originated Fair Financing loans to funds managed by Elliott on a rolling basis.

“The transaction provides scalable, off-balance-sheet funding to support Klarna’s growing U.S. consumer credit business,” Klarna stated.

Klarna shares were down by 0.3% in Tuesday’s pre-market trade. Retail sentiment on Stocktwits around the company trended in the ‘bullish’ territory at the time of writing.

Fueling Growth Ambitions

Klarna, known for its buy now, pay later (BNPL) offerings, has stated that interest in its Fair Financing offering is rising. The company said that the Fair Financing gross merchandise value has grown by 139% globally, and 244% in the U.S., over the past year.

“This is another major step in our U.S. growth journey,” said Klarna CFO Niclas Neglén. “This agreement lets us reach even more Americans who are moving on from traditional credit and choosing fairer ways to pay.”

What Does Klarna Do?

Founded in 2015, Klarna is a Swedish fintech company that offers payment processing services to e-commerce partners. The company made its debut on the New York Stock Exchange (NYSE) in September, with its shares rising 33% at the time of listing.

In the 12 months ending June 30, Klarna reported generating $112 billion in gross merchandise value on its platform, according to the SEC filing. It has 111 million active users and 790,000 merchants on its platform for its BNPL and other services.

KLAR stock is down 23% year-to-date.

Also See: Wharton's Jeremy Siegel Warns Fed's Hawkish Tone Is 'Misguided', Says He'd Be A Buyer In Case Of A 5-10% Correction

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