H&M is acquiring a stake in a Fintech

Hennes & Mauritz is acquiring a stake in Klarna in a partnership that entails the Swedish fintech company providing online and in-store payments for customers of the fast-fashion retailer. The deal between the world’s second-largest clothes retailer and one of Europe’s leading fintech groups will start in 14 European countries, starting with the UK and Sweden, but has the scope to expand to the US and Asia… The Swedish retailer is paying SKr185 million ($20 million) for a stake of less than 1 per cent in Klarna, which is issuing new shares to H&M, unlike a similar deal last year when Visa acquired existing shares… Klarna was last valued at $2.5 billion in 2015… H&M has struggled in recent years after focusing for too long on its stores and not doing enough online… Klarna is promising to simplify H&M’s returns and delivery processes — a source of frustration to many customers— as well as combining its in-store, online and mobile payments. Customers will, for instance, be able to pay using H&M’s smartphone app both in a shop and online… H&M’s shares have more than halved since early 2015 as investors fret about its weak sales growth and poor profitability compared with its bigger rival, Spain’s Inditex, the owner of Zara.

Richard Milne