Yahoo Finance Klarna Investors Push for More Control in Post-IPO Structure
(Bloomberg) -- Klarna Bank AB’s largest shareholders have asked the company to consider creating a special class of shares that would hand early investors more control over company decisions after its public debut.
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If the proposal passes, then current shareholders, a list that includes the likes of Chief Executive Officer Sebastian Siemiatkowski and Sequoia Capital, would be given shares that carry greater rights than common shares, according to people familiar with the matter.
Victor Jacobsson, a Klarna founder who has left the company but remains a significant shareholder, has privately opposed any structure that would give special shares to Siemiatkowski, the people said, asking not to be identified discussing a private debate. Tension between the two co-founders was one of the factors in the recent drama over governance involving Sequoia Capital, one of Klarna’s biggest backers.
“There are no proposals of introducing any new special rights to any individual or select group of shareholders,” a spokesperson for Siemiatkowski said in an emailed statement. “Sebastian has supported, together with Sequoia and Bestseller, the removal of currently held special rights, for the benefit of the company and all the shareholders collectively,” noting it was part of the push to create a UK holding company and was communicated to investors in November.
Representatives for Klarna, Sequoia and Jacobsson declined to comment. A spokesperson for Bestseller didn’t immediately respond to a request for comment.
The dual-class share structure makes the occasional appearance in Silicon Valley, though the practice has drawn criticism from some corporate governance experts. For instance, Meta Platforms Inc. has two classes of shares with one category having 10 times the voting rights of the other. Those shares are controlled by Mark Zuckerberg meaning he has voting control over the company despite his minority economic stake.
Siemiatkowski has previously voiced support for such structures because he’s said it allows executives to prioritize long-term success over short-term profits.
“I was a believer in one vote, one share,” Siemiatkowski said in an interview with the Daily Mail in 2021. “But then I found myself in a boardroom where some people said we must sell the company urgently. Other people like myself said: ‘You’re wrong.’”
Read More: Why Dual-Class Shares Catch On, Over Investor Worries: QuickTake
Klarna has recently started having detailed discussions with investment banks to work on an initial public offering, Bloomberg News reported last month.
Once Europe’s biggest startup, Klarna’s valuation reached a staggering $45.6 billion in a 2021 round before falling to $6.7 billion the following year, as rising interest rates forced investors to reconsider backing online lending platforms.
(Updates comment in fourth paragraph.)
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