(Bloomberg) -- Mexican financial technology firm Klar is expecting its growth path to allow it to seek an initial public offering at the end of 2026.
The company is eyeing an annual run rate of $500 million to look for an IPO, a scale Klar is forecasting it will achieve in the third quarter of 2025, according to Juan Sarmiento, its vice president of finance. Its current run rate is $230 million.
Among metrics that would need to be sustained for a period of six to 12 months to ensure Klar is ready for an IPO, Sarmiento cited gross margins above 50%, which the company aims to achieve in the first half of 2025, and return on equity at those levels in the second half.
The plans come amid a challenging environment for IPOs out of Latin America, with companies staying on the sidelines as rates in the US remain high. The region has only seen 41 exits with a value of less than $100 million through September, setting the stage for Latin America’s exit value to be the lowest since 2016, according to data from Pitchbook.
Klar is also waiting to see how investor sentiment settles amid the transition to President Claudia Sheinbaum, who took office Oct. 1. Her party is enacting one of the biggest judicial overhauls the nation has seen, prompting questions from corporate leaders and foreign investors about whether they’ll have the legal certainty they need to invest in Mexico.
“People want to observe the political situation to see how the new government deploys public policy and develops the economy,” Chief Executive Officer Stefan Moller said. “But we are confident the new administration will be able to send the necessary signs to give certainty to large-scale international investors.”
Klar counts General Atlantic, IFC, Prosus and Mouro Capital among its backers. The company’s most recent raise was a $90 million round in June 2022. The executives said they’re always evaluating funding possibilities.
In Mexico, only about a third of adults have formal credit and cash is still king among payment methods, with over 70% of adults using it for daily transactions, according to government data. The pool of fintechs seeking to compete in the country has grown in recent years, though statistics show slow progress in the adoption of formal financial products.
The company will move to increase its consumer lending in the country as it seeks scale, Moller said. Mexican companies need to prove to investors, as Brazilian fintechs have done, that business in the country can bring attractive returns, he added.
Klar, which operates only in Mexico, focuses on medium-income professionals and university students, with offerings including credit and savings accounts with up to 13.5% returns. It currently has 2 million active users and expects to reach 10 million in the next five years, as business has been growing as quickly as 12% monthly, Sarmiento said.
The company reached a break-even point in September, Sarmiento said. It posted revenues of $17.6 million last month and expects to see $18.7 million in October, he added.
(Adds comments on Brazil peers in ninth paragraph)
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