Klarna (NYSE: KLAR) announced that investment funds managed by Elliott Investment Management will purchase the company's U.S. Fair Financing loans under a two-year agreement expected to facilitate $6.5 billion worth of loans.

The agreement allows Klarna to sell part of its existing Fair Financing portfolio and newly originated receivables to Elliott-managed funds on a rolling basis starting in October. The transaction provides off-balance-sheet funding for Klarna's U.S. consumer credit business while maintaining the company's control over underwriting and servicing operations.

The facility size is $1 billion, with new loans entering the facility as underlying assets amortize over the two-year term. The structure includes both a back-book sale of existing loans and a forward flow arrangement for future originations.

"This is another major step in our U.S. growth journey," said Niclas Neglén, Chief Financial Officer at Klarna. "Fair Financing puts people in control, giving them real choice and flexibility with clear terms and no surprises. This agreement lets us reach even more Americans who are moving on from traditional credit and choosing fairer ways to pay."

Klarna reported that Fair Financing gross merchandise volume grew 139% globally and 244% in the U.S. over the past year. The company operates as a digital bank and payments provider with over 111 million global active users and processes 2.9 million transactions daily.

The agreement aims to improve Klarna's financial flexibility and capital efficiency while providing predictable funding economics for the company's U.S. expansion in the installment payments market.