Swedish buy-now-pay-later (BNPL) firm Klarna is close to raising new funds at a valuation of about $6.5bn, reported WSJ citing unidentified people familiar with the matter.

The firm is in talks to raise approximately $650m from a number of its existing investors in a funding round led by Sequoia Capital, the sources divulged.

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According to these sources, Klarna is yet to finalise the deal, which may be subject to last minute changes.

The people also added that if the deal is completed, it would result in significant a markdown on the company’s current valuation.

Klarna become the highest-valued private fintech in Europe with its $639m funding round in June last year. The round, which was led by SoftBank’s Vision Fund 2, valued the firm at $45.6bn.

The firm benefitted from the increased demand for BNPL products during the pandemic and raised its valuation aggressively through several funding rounds.

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The firm, which is said to have put most of its capital to drive its US expansion, has been struggling amid difficult market conditions.

A report by WSJ in May said that the firm was now aiming to secure funds at about a third less than its current valuation.

According to the latest report, Klarna was eyeing a $50bn valuation initially. However, it was later cut to around $30bn, and then to $15bn, before investors and the company agreed on even lower valuation.

Last month, Klarna CEO Sebastian Siemiatkowski said that firm will cut its employee headcount by 10% as it is forced to re-evaluate its organisational setup in “a tumultuous year” marked by Ukraine war, evolving consumer sentiment, rising inflation, a highly volatile stock market and a possible recession.