Klarna has struck a two-year forward-flow agreement with Elliott Investment Management that will see Elliott funds purchase as much as $6.5bn of the fintech’s longer-duration US consumer loans, according to a report by Bloomberg.
The deal provides Klarna with fresh balance-sheet flexibility as it accelerates its American expansion.
The $1bn facility commits Elliott to buying loans before they’re originated, enabling Klarna to scale its “fair financing” instalment product, which allows shoppers to spread payments on higher-ticket purchases over periods of up to 24 months. The product has become a fast-growing segment of the business, with global volumes up 139% in the past year and 244% in the US.
Klarna CFO Niclas Neglén said the deal is a “major step” in building out its US offering, as consumers shift away from traditional credit and toward alternative financing structures. APRs on Klarna’s longer-term loans range from 0% to 35.99%.
Forward-flow partnerships have become central to Klarna’s push for more profitable, capital-light growth. The Elliott agreement follows a similar UK deal last year covering up to £30bn of receivables, as well as a $26bn US forward-flow arrangement with Nelnet. The sector has seen a wave of similar transactions, including KKR’s agreement this week to buy as much as €65bn of PayPal’s BNPL loans.
