Klarna becomes Europe’s biggest fintech unicorn at over $10 billion valuation after mega-round

Klarna is now officially Europe’s highest valued private fintech company.

The Swedish online payments firm says it has raised $650 million in an equity funding round, valuing the company at $10.6 billion. The round was led by Silver Lake Partners, alongside GIC, Singapore’s sovereign wealth fund, as well as BlackRock and HMI Capital.

“Klarna is one of the most disruptive and promising fintech companies in the world, redefining the ecommerce experience for millions of consumers and global retailers, just as ecommerce growth is accelerating worldwide and rapidly shifting to mobile,” said Jonathan Durham, managing director of Silver Lake Partners, in a release announcing the deal.

A regulated bank, Klarna is mostly known for its “buy now, pay later” model that offers shoppers interest-free financing on retail purchases over a period of installments. Klarna pays a merchant once a customer buys something using its platform, while users are later invoiced over a number of installments. Its regional competitors include British banking App, Revolut and Payments software maker, Checkout.com.

Revolut, Klarna and Checkout had all been valued at $5.5 billion, according to CB Insights unicorn tracker, before the deal.

The company also competes with the likes of U.S.-based Affirm, which is led by PayPal co-founder, Max Levchin, and Australia’s Afterpay. Last month, Afterpay said it had agreed to buy Spanish firm Pagantis in a deal that allows it to expand into Europe, effectively challenging Klarna.

To date, the Klarna app has more than 12 million monthly active users worldwide, with 55,000 daily downloads, which the company claims is almost three times as many downloads as its closest competitor over the last year.

Klarna ranked number 5 on this year’s CNBC Disruptor 50 List.

“We are at a true inflection point in both retail and finance,” Klarna co-founder and CEO, Sebastian Siemiatkowski, said in the deal announcement. “The shift to online retail is now truly supercharged and there is a very tangible change in the behaviour of consumers who are now actively seeking services which offer convenience, flexibility and control in how they pay and an overall superior shopping experience.”