Klarna, a European buy-now-pay-later company, is close to securing a new funding round at a valuation of more than $40 billion, according to a source familiar with the matter.

The investment is being backed by SoftBank and multiple other investors, said the person, who asked to remain anonymous as the details have not yet been made public.

The news, which comes ahead of a potential blockbuster stock market listing, was first reported Thursday by Business Insider.

The exact size of the investment round is unknown. However, it is expected to be less than the $1 billion that Klarna raised in March, when it was valued at $31 billion, according to Business Insider.

SoftBank and Klarna declined to comment when contacted by CNBC.

Klarna is already listed as a portfolio company on SoftBank’s website through the firm’s Vision Fund 2. Klarna is also backed by big-name investors like Snoop Dogg and China’s Ant Group. A SoftBank spokesperson was not immediately available to comment.

If the deal goes through, Klarna will cement its place as European’s most valuable private tech unicorn, surpassing the likes of Amazon-backed food delivery service Deliveroo and online payment processor Checkout, which hit a $15 billion valuation in January.

Less than three hours after the funding round was first reported, Klarna CEO Sebastian Siemiatkowski announced on Twitter that the company has experienced a “self-inflicted incident.”

“So sad and frustrating to realize that we have had a self-inflicted incident, for 30 min, affecting the privacy of some of our users,” he said, indicating that the company may have experienced a data breach of some sort.

“Full attention from all colleagues to bring back things to normal, take actions to avoid this going forward and communicate broadly,” added Siemiatkowski.

Klarna continues to grow rapidly more than a decade after it was founded, and has made significant strides expanding into the U.S. It got a big boost last year from heightened demand for buy-now-pay-later plans, fueled in part by coronavirus lockdowns that accelerated a shift toward online shopping.

At the same time, the heightened demand for buy-now-pay-later products has drawn scrutiny from regulators in the U.K., who are set to bring in strict new rules governing the sector.

“We are, with this product, challenging a massive industry that has overcharged consumers with overdraft fees, with interest bearing terms of use,” Siemiatkowski told CNBC in February. “There’s a lot of misconceptions in the U.K., but when we get the chance to sit down with U.K. politicians … they get convinced and then they switch sides.”

Klarna hit $1 billion in annual revenue for the first-time last year, posting record operating income of $1.2 billion. However, losses also accelerated 50% due to increased costs associated with international expansion, with Klarna’s net loss coming in at about $109.2 million.

Klarna makes money by taking a fee from merchants each time a customer makes a transaction. It says merchants that use its service often see an increase in sales as a result. The company is a regulated bank, and has been increasingly making a drive into retail banking in its home country as well as Germany.