News: APT Australia's Commonwealth Bank raises stake in pay-later fintech Klarna

Jan 30 (Reuters) - Commonwealth Bank of Australia (CBA) said on Thursday it had raised its stake in Swedish buy now, pay later (BNPL) firm Klarna with a $200 million investment and launched the payment provider's services in Australia.

Klarna is also backed by Sequoia Capital and rapper Snoop Dogg and Australia's largest bank will now hold a 5.5% stake in the company, after making an initial $100 million investment last year.

CBA's Chief Executive Matt Comyn said the decision to raise the shareholding allows it to "address the rapidly growing demand among consumers for new payment option" and tap Klarna's international operations.

The bank will own half of Klarna's operations in Australia and New Zealand and will have the right to partner with the Swedish company in Indonesia.

CBA's investment comes when BNPL firms, which offer consumers a simpler alternative to credit cards with small installment loans, have gained popularity among millennials.

But these firms, including bellwether Afterpay Ltd (APT) , have also attracted intense regulatory scrutiny, with some suggesting that the business model should be treated with the same oversight as bank loans.

Founded in 2005, Klarna has over 85 million customers using its service to buy goods and services from 200,00 merchants, CBA said. Its last funding round in August valued the fintech firm at $5.5 billion.