Fashion retailer H&M is investing Skr185m ($20m) in Sweden-based payment technology provider Klarna as part of a partnership agreement, the Financial Times has reported.
Formerly known as Kreditor, Klarna works with a client base of about 90,000 online retailers to give customers the chance to pay for items through instalments, triggering the option at the checkout.
The company’s technology will partner a H&M loyalty scheme called H&M Club, which will give customers points for both online and in-store purchases, and will also beef up the retailer’s payment options and enhance the post-purchase service in its app.
Although the size of the stake H&M is acquiring through the deal was not disclosed, Klarna was valued at about $2.5bn when investment firm Permira bought a 10% stake in July 2017 through a secondary share purchase, according to the FT.
Daniel Claesson, H&M’s head of business development, said in a statement: “We at H&M are very excited about this partnership. We want to make it possible for customers to move freely between the various channels and choose how they want to shop and experience our offering online and instore.
“This partnership will bring tailor made payment solutions to our customers and accommodate evolving shopping patterns and needs. This includes the possibility to ‘try before you buy’ which is very relevant to online fashion retail today and to pay with their mobile phone directly through the H&M app both instore and online.”
Klarna’s investors also include payment services firm Visa, which invested an undisclosed sum in June 2017 following about $355m of funding since the company was founded in 2005.
Investment AB Öresund provided an undisclosed amount of funding for Klarna in 2007. Sequoia Capital led a $9m round three years later but did not participate in a $155m round co-led by DST Global and General Atlantic in 2011.
Sequoia, General Atlantic and Atomico invested $105m in the company in 2014, and Northzone and Wellcome Trust added $80m at a $2.25bn valuation the following year. Creandum supplied another $5.2m in March 2017.
DST Global and General Atlantic sold all their shares to Permira as part of the July deal, having also sold stock to fashion holding company Brightfolk, which reportedly also picked up a stake of about 10% in June 2017.
