Klarna secures €900M facility to fund €5B German lending push

What's the deal? Klarna has set up a €900 million forward flow and warehouse financing facility in Germany, its first such agreement in the country. The two-year deal will fund the growth of the company's Fair Financing consumer credit products in one of Europe's largest consumer markets.

How it works: Klarna has sold a portfolio of German Fair Financing term loans and will sell newly originated receivables on a rolling basis. The structure gives Klarna scalable, off-balance-sheet funding while it keeps all consumer-facing activities, including underwriting and servicing.

Why now? The facility responds to what Klarna calls strong demand for its Fair Financing products among German consumers. As loans amortise over the two-year term, new ones enter the facility, allowing Klarna to originate up to €5 billion in German term loans over the life of the program.

What's the endgame? "This facility is a natural next step, bringing greater capital efficiency as we scale that growth further," said chief financial officer Niclas Neglén. He added the company was pleased to welcome new partners "drawn by the strong credit quality of these products."

Klarna, a digital bank and payments provider listed on the New York Stock Exchange, counts more than 119 million active users and 3.4 million daily transactions. Over one million retailers use its services, including Uber, H&MDealroom has a profile for this one. Try Dealroom →, Ikea, Nike, and Airbnb.

The signal: The raise ranks in the 95th percentile among post-IPO debt deals from Swedish companies over the past four years. For a newly public Klarna, off-balance-sheet financing offers a way to expand lending without straining its own capital — a template it can extend market by market across Europe.

Read more: Wall Street Online

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