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UAE’s sovereign wealth fund Mubadala key investor in Klarna’s $800 million round

As the valuation of the buy-now-pay-later giant Klarna plunged 85%, the company saw investors close a round of funding despite the challenges.

[Source photo: Anvita Gupta/Fast Company Middle East]

During its worst-performing year, buy-now-pay-later giant Klarna closed an $800 million financing round with investors, including Abu Dhabi’s sovereign wealth fund Mubadala Investment Company.

Klarna’s valuation plunged to $6.7 billion from 45.6 billion last year. “It’s a testament to the strength of Klarna’s business that, during the steepest drop in global stock markets in over fifty years, investors recognized our strong position and continued progress in revolutionizing the retail banking industry,” Sebastian Siemiatkowski, CEO of Klarna, said in a statement. 

The investment is of $800m in common equity and at a valuation three times higher than back in 2018, outperforming Klarna’s public peers for the same period. Klarna has not been immune to the significant downdrafts of fintech stock in public markets. The company’s peers are down 80-90% vs. peak valuations, and consequently, the adjustment in Klarna’s valuation is on par with its public peers from its $45.6 billion valuations in June 2021.

The fresh investment in Klarna occurred during “possibly the worst set of circumstances to afflict stock markets since World War II: high inflation, rising interest rates, mounting fears of a recession, the after-effects of the first global pandemic since 1918, strains on commerce caused by supply chain disruptions, rising gas prices, and, especially in Europe, the dislocations caused by the war in Ukraine,” the company said in a press release.

Despite these challenges, Klarna received strong backing from its existing investors, including Sequoia, the founders, Bestseller, Silver Lake, and Commonwealth Bank of Australia. Several entities known for their long-term commitments made their first investments in Klarna. 

These include Mubadala Investment Company, the $284 billion sovereign fund of the UAE, and the Canada Pension Plan Investment Board (CPP Investments), which manages over $539 billion. After the round’s major closure, Klarna now aspires to allow all of its more than 1000 smaller shareholders to participate on a pro-rata basis in a process that will continue for the coming few weeks.

Klarna remains a driving force in revolutionizing the payments market. Consumers today demand — and deserve — more control and flexibility over their finances, and Klarna’s offering, global reach, and continued innovative approach demonstrate the value of their payment solution for customers everywhere. We are thrilled to be partnering with a generational company and look forward to supporting Sebastian and his team on this next stage of growth,” Ibrahim Ajami, Head of Ventures and Growth at Mubadala Investment Company, said in a statement.

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