Klarna has entered into a major U.S. funding agreement expected to support $6.5 billion in Fair Financing loans, marking one of the company’s largest U.S. capital arrangements to date and reinforcing its rapid growth in the American consumer credit market.
The global digital bank and flexible payments provider announced that investment funds managed by Elliott Investment Management will purchase both existing and newly originated U.S. Fair Financing loans over a two-year term. The structure provides Klarna with scalable, off-balance-sheet funding, strengthening the company’s liquidity position while enhancing long-term capital efficiency.
As part of the agreement, Klarna will sell portions of its current portfolio as well as new Fair Financing receivables on a rolling basis beginning in October. Klarna will continue to own all consumer-facing components of the product, including underwriting and servicing, while benefiting from immediate revenue recognition through the back-book sale and predictable economics via the forward-flow structure.
The company said the arrangement supports its broader strategy to grow its U.S. fixed-term installment business, which has seen strong momentum. Over the past year, Fair Financing gross merchandise volume grew 139 percent globally and 244 percent in the United States. Klarna expects the new funding facility to help sustain similarly accelerated expansion in the years ahead.
The facility itself totals $1 billion, but due to continuous amortization and replenishment of underlying assets over the two-year term, Klarna anticipates that the vehicle will enable approximately $6.5 billion in total loan originations.
Klarna currently serves more than 111 million active global users and processes nearly 3 million daily transactions. Over 790,000 retailers partner with the platform across ecommerce, in-store, and digital wallet channels. The company is listed on the New York Stock Exchange under the ticker KLAR.
KEY QUOTE:
“This is another major step in our U.S. growth journey. Fair Financing puts people in control, giving them real choice and flexibility with clear terms and no surprises. This agreement lets us reach even more Americans who are moving on from traditional credit and choosing fairer ways to pay.”
Niclas Neglén, Chief Financial Officer, Klarna
