By Ateev Bhandari and Arasu Kannagi Basil

Sept 9 (Reuters) - Swedish buy-now, pay-later lender

Klarna is set to price its long-awaited U.S. IPO later on

Tuesday, setting the stage for a market debut closely watched as

a bellwether for high-growth fintech listings.

Klarna is headlining a string of companies, from crypto to

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

equity markets and blockbuster debuts have eased tariff

uncertainty and reignited investor interest in IPOs.

The issue marks a milestone for the fintech, after a rapid

ascent as a BNPL leader propelled its valuation to more than $45

billion in 2021.

The Sequoia Capital-backed company's valuation dropped to

$6.7 billion in 2022, amid rising interest rates and higher

inflation.

Klarna and some of its investors plan to sell 34.3 million

shares in the IPO at between $35 and $37 apiece, aiming to raise

up to $1.27 billion.

Should the IPO price at the top end of the marketed range,

Klarna would fetch a valuation of nearly $14 billion.

An investor, who declined to be named publicly, told Reuters

that the order book was 15 times oversubscribed on Monday.

"The scale of oversubscription shows just how eager

investors are to get exposure to a market leader in BNPL," said

Rudy Yang, senior analyst at PitchBook.

Klarna, which has been readying a New York listing for

years, paused its plans in April due to choppy global markets

after U.S. President Donald Trump announced sweeping tariffs on

major trading partners.

Founded in 2005, Klarna remained profitable until its

expansion into the U.S. 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 on revenue of $823 million for

the quarter ended June 30, from $7 million on $682 million a

year earlier.

"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," Yang

said.

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 believe 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

Amid sticky inflation, labor market cracks and slowing

income growth, U.S. consumer spending has held up.

Alternative payments services like 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 come from merchants on its network - the lowest as a

share of total revenue for the same period since 2022.

During the period, the share of interest income 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.