Klarna secures 900 million euro financing facility in Germany

Klarna has established its first forward flow and warehouse financing agreement in Germany, a 900 million euro facility to fund growth of its consumer financing products, the company said in a statement dated July 9. The company described Germany as one of Europe’s largest consumer markets.

Under the two-year agreement, Klarna has sold a portfolio of its German Fair Financing term loans and will sell newly originated German receivables on a rolling basis. The company said the structure provides off-balance-sheet funding while it retains all consumer-facing activities, including underwriting and servicing.

“Fair Financing continues to see strong momentum with German consumers,” Niclas Neglen, chief financial officer of Klarna, said in the statement. “This facility is a natural next step, bringing greater capital efficiency as we scale that growth further.”

As the underlying loans amortize over the term, new loans will continue to enter the facility. Klarna said it expects the arrangement to support the origination of up to 5 billion euro of German Fair Financing term loans over the remaining life of the program.

Klarna, which trades on the New York Stock Exchange under the ticker KLAR, reported more than 119 million active users globally and 3.4 million transactions a day, according to the release.