Klarna Secures $26 Billion BNPL Loan Sale Deal with Nelnet

Buy now, pay later giant Klarna offloads credit risk through massive loan sale as company prepares for public listing

Key Takeaways

• $26 billion loan sale agreement finalized between Klarna and Nelnet through a multi-year forward flow structure for US buy now, pay later receivables
• IPO preparation strategy as Klarna filed confidentially for New York listing on November 12, 2024, using the deal to strengthen balance sheet flexibility
• Risk management shift toward “originate-to-distribute” model, moving loans off-balance-sheet while maintaining servicing control and consumer relationships

Introduction

Klarna has struck a landmark $26 billion agreement with student loan giant Nelnet to purchase US buy now, pay later loans, marking one of the largest structured finance deals in the BNPL sector. The multi-year forward flow arrangement transfers newly originated Pay in 4 receivables to the financial services firm on a rolling basis.

This strategic move reflects the Swedish fintech’s preparation for public markets and signals a broader industry shift toward institutional partnerships. The deal provides Klarna with predictable off-balance-sheet funding as it scales operations in its largest growth market.

Key Developments

The forward flow structure allows Klarna to sell short-term, interest-free receivables while retaining origination and servicing responsibilities. This arrangement maintains consistency in consumer and merchant experiences while transferring credit risk to Nelnet.

The timing coincides with Klarna’s confidential IPO filing on November 12, 2024, as the company seeks improved capital ratios ahead of its anticipated New York listing. CFO Niclas Neglén describes the partnership as enabling responsible scaling of core products.

This represents Klarna’s second major loan portfolio sale, following last year’s £30 billion UK receivables transaction with Elliott Investment Management. The pattern indicates a systematic approach to balance sheet optimization across key markets.

Market Impact

The transaction removes significant credit exposure from Klarna’s balance sheet, improving capital efficiency as economic conditions face increased volatility. Industry analysts view the move as prudent risk management that positions the company favorably for public market scrutiny.

The deal demonstrates growing institutional appetite for BNPL assets, with traditional financial services companies like Nelnet entering the space. This institutional validation supports broader market confidence in the asset class.

Competitors including Affirm and PayPal are exploring similar risk management strategies, suggesting industry-wide movement toward structured finance partnerships rather than balance sheet lending models.

Strategic Insights

Klarna’s shift toward an “originate-to-distribute” model mirrors traditional lending practices in mortgages and credit cards. This evolution signals BNPL’s maturation from fintech innovation to mainstream financial infrastructure.

The strategy allows capital recycling into new product development and market expansion while reducing regulatory capital requirements. For Nelnet, the partnership provides exposure to high-growth consumer credit tied to e-commerce activity.

Winners include institutional investors gaining access to BNPL receivables and fintech companies achieving scalable funding structures. Traditional banks may face increased competition as alternative lenders optimize their business models.

Expert Opinions and Data

Judd Deppisch, Chief Investment Officer of Nelnet Financial Services, emphasizes the transaction’s importance in supporting Klarna’s continued success. The partnership structure aligns with both companies’ long-term strategic objectives.

According to Bloomberg, the deal provides scalable funding that strengthens Klarna’s US growth strategy. Industry data shows the global BNPL market reaching $80.15 billion by 2033, with 27% annual growth projected through the period.

US BNPL spending expects to reach $97.25 billion in 2025, with 105 million users by 2028. Over half of Americans now use BNPL services, with Generation Z and Millennials leading adoption at 59% and 58% respectively.

Conclusion

The Nelnet partnership represents Klarna’s strategic evolution from high-growth fintech to structured finance participant with institutional backing. The transaction enables sustainable scaling while maintaining direct consumer relationships and service quality.

This deal establishes a template for BNPL providers seeking to balance growth ambitions with prudent risk management. Klarna now operates with enhanced financial flexibility as it approaches public markets and continues expanding its dominant US market position.