What does the Klarna IPO mean for the LSE?

Klarna’s initial public offering (IPO) marked one of the most anticipated fintech listings of the year, as the Swedish buy-now-pay-later (BNPL) giant debuted on the New York Stock Exchange with a valuation of approximately $14.9bn. It raised $1.45bn in fresh capital in the process. 

The offering included a mix of new and existing shares, with strong demand pushing the order book to more than 15 times oversubscribed, underscoring investor appetite for consumer finance and AI-driven credit models. Klarna’s decision to list in New York – rather than London – was seen as a strategic move to tap deeper capital markets and align with its growing US footprint, where it now generates a significant portion of its revenues. 

Despite a sharp drop from its 2021 private-fundraising valuation of $45bn, the IPO was viewed as a successful reset, positioning Klarna for long-term growth amid tightening regulation and rising competition in the BNPL space. The shares popped by as much as 40% on their first day of dealing and ended the day with gains of 15%. Klarna shares debuted on the New York Stock Exchange under the ticker KLAR. The shares opened at $52 – about 30% above its IPO price of $40 – and rose as high as $57.20 during the first session. By the close of the session, though, the shares had pared back to $45.82. This is despite Klarna's underwriters initially pricing the company's shares at $40, above the expected range of $35 to $37. 

The incredible shrinking market

London has a problem – or rather its stock exchange does. Companies are delisting faster than they are joining. It doesn’t take a Nobel Prize in Economics to see that, over the long term, this is a bad turn of events for the world’s second oldest bourse. 

London’s IPO drought has been stark. In 2024, the City of London ranked 20th globally for IPO activity according to Bloomberg, with just 18 listings compared with 225 in New York. Contrastingly, data from the London Stock Exchange shows that 88 companies delisted or transferred their primary listing elsewhere in 2024. Such a trend, if unstopped, would mean London as a centre of equity finance would drift into obscurity. 

De-listings, takeovers, and a lack of high-growth technology companies have all contributed to the perception of decline. High-profile companies such as raw materials group CRH, gambling giant Flutter Entertainment, equipment-hire group Ashtead and plumbing specialist Ferguson (formerly Wolseley) have already shifted their primary listings to New York or are in the process. Many others have threatened to do so including miner Glencore and oil giant Shell. There are also calls for Asia-focused businesses HSBC and Prudential to move their primary listing to Hong Kong and activists have tried to pressure Rio Tinto to have its main listing in Australia. 

The allure of New York City

The attraction of deeper capital pools, potentially higher valuations, and more liquid markets has proven irresistible for many UK-based companies seeking global investor attention. Many companies that jumped across the Atlantic also had most of their business in the US, particularly in the cases of Ferguson and Ashtead. Transferring the stock market listing made utter sense in these cases. 

The US offers higher price-to-earnings ratios, faster-growing equity markets, and more flexible listing regimes. Founders are drawn to dual-class-share structures and lighter post-listing regulation, while investors benefit from greater liquidity and index inclusion. In short, New York promises scale, speed, and visibility that London has struggled to match. In the UK, the lack of domestic investment, Brexit-related uncertainty, and outdated listing rules have all played a role in deterring new entrants.

Amid this gloom there are reasons for optimism. The UK is taking aggressive steps to revitalise its IPO market and reaffirm the LSE’s global relevance, with coordinated efforts from the Financial Conduct Authority (FCA), Chancellor Rachel Reeves, and the City of London Corporation. 

The FCA has introduced sweeping reforms to streamline the listing process, including halving the time between initial documentation and IPO, scrapping lengthy prospectus requirements for secondary share sales, and easing rules around corporate bond issuance to retail investors. 

Chancellor Reeves has pledged to “revolutionise” the UK’s capital markets, describing the FCA’s overhaul as a “once-in-a-generation reform” and promising further regulatory agility to boost listings. She has also backed the Private Intermittent Securities and Capital Exchange System (Pisces), aimed at helping private companies transition to public markets. 

Meanwhile, the City of London Corporation has voiced strong support for these reforms, highlighting the potential to unlock £100bn in investment through changes to Solvency II and other regulatory frameworks. Together, these initiatives signal a concerted push to make London a more attractive destination for high-growth companies and global capital.

The government is moving in the right direction

Moves are afoot to make a London listing more attractive. In July 2024, the UK Financial Conduct Authority (FCA) unveiled the most sweeping overhaul of its listing rules in over three decades, aimed at revitalising London’s capital markets and attracting more high-growth companies to float domestically. 

Central to the reforms is the creation of a single listing category for equity shares in commercial companies, replacing the previous “premium” and “standard” segments. The new regime, effective from 29 July 2024, removed the requirement for shareholder approval on significant and related-party transactions, shifting to a more disclosure-based model. It also introduced greater flexibility for dual-class share structures and relaxed eligibility criteria, such as the need for a three-year revenue track record. 

While the changes reduce some investor protections, the FCA argues they better reflect the risk appetite needed to foster innovation and global competitiveness. The reforms are part of a broader push to reverse the UK’s declining share of global IPOs and make London a more attractive listing venue.

But back to the Klarna IPO. Does the New York success of the BNPL company? mean anything for the Square Mile? Well, it does – and the implications are positive. Klarna's many-times oversubscribed debut could encourage other fintechs to go public this autumn, although the market's appetite could fade quickly if weaker deals follow.

While the UK IPO market has been slower than expected, several high-profile fintech listings could be in the pipeline including Revolut, Monzo and Shein. Other companies such as Waterstones and BrewDog are rumoured to be taking the IPO route too, despite delays in the latter. 

The LSE is not dead – it’s evolving 

With regulatory reform, political support, and renewed investor interest, London is positioning itself for a comeback. As Chancellor Rachel Reeves put it, the new rules are a “vote of confidence” in UK capital markets. If the reforms deliver and the IPO pipeline materialises, the LSE could reassert itself as a global hub for equity capital - not a relic, but a resilient force. It is in all our interests that it does.