By Ateev Bhandari and Harshita Meenaktshi

Sept 9 (Reuters) - Buy-now, pay-later lender Klarna said

on Tuesday it has raised $1.37 billion in its U.S. initial

public offering, setting the stage for a market debut that could

set the trend for high-growth fintech listings.

The Sequoia Capital-backed Swedish company and some of its

existing investors sold 34.3 million shares at $40 each, above

the targeted range of $35 to $37.

Earlier in the day, Reuters had reported, citing two

sources, that the IPO values Klarna at $15.11 billion - a

significant drop from the more than $45 billion valuation it

notched in 2021 after a rapid ascent as a BNPL leader.

Its valuation dropped to $6.7 billion in 2022 amid rising

interest rates and inflation.

The offering was oversubscribed by 25 times, a person

familiar with the matter had told Reuters.

Klarna is headlining companies ranging from crypto to

consumer that are aiming to go public in New York this week, as

a rallying stock market and blockbuster debuts ease tariff

worries and rekindle investor interest in IPOs.

The company, which has been planning a New York listing for

years, paused its efforts in April as sweeping U.S. tariffs on

its trading partners resulted in choppy global markets.

Founded in 2005, Klarna was profitable until its U.S.

expansion in 2019, just ahead of the online shopping boom

sparked by the COVID-19 pandemic.

While its user count and gross merchandise value continue to

expand in double digits, profitability remains a challenge.

Losses widened to $52 million in the quarter ended June 30

from $7 million a year ago, while revenue rose to $823 million

from $682 million.

"While the market is open again to fintech listings,

companies will be judged quickly on their ability to balance

growth with profitability in a tougher macro backdrop," said

Rudy Yang, senior analyst at PitchBook.

The company also operates as a digital-first neobank. Peer

Chime's shares popped 59% in its Nasdaq debut in June,

although they trade below the issue price, as of last close.

However, analysts said Klarna's brand power might help

secure its footing among fintechs.

"The sector is highly competitive and rapidly evolving, and

brand recognition, where Klarna remains strong, is often as

critical as (the) business model," said Kat Liu, vice president

at IPO research firm IPOX.

DEMAND UPTICK

U.S. consumer spending has held up despite sticky inflation,

labor market cracks, and slowing income growth.

Alternative payments services such as Klarna, which ease the

immediate financial burden by allowing shoppers to split

purchases into smaller, interest-free installments over weeks or

months, have witnessed stable demand.

For the 12 months ended June 30, Klarna earned 75% of its

revenue from transaction and service-based fees - the majority

of which came from merchants on its network - the lowest as a

share of total revenue for the same period since 2022.

The share of interest income in this period rose to 25%.

"Since Klarna's BNPL model depends on both transaction

volume and repayment rates, lower spending reduces merchant fee

capture while also raising the risk of credit losses," Liu said.

Goldman Sachs, J.P. Morgan, and Morgan Stanley are the joint

book-running managers. Klarna will start trading on the New York

Stock Exchange under the symbol "KLAR" on Wednesday.