PayPal to sell up to €40bn of European BNPL loans to KKR
Global investment firm KKR is set to buy up to €40 billion of buy now, pay later (BNPL) loans originated by PayPal in Europe as part of an exclusive multi-year deal.
KKR to buy up to €40bn of BNPL loans from PayPal
As per the agreement, KKR’s private credit funds and accounts will acquire substantially all of PayPal’s European BNPL portfolio (including France, Germany, Italy, Spain and the UK) at close of transaction, along with future originations of eligible BNPL loans.
The companies say PayPal will be responsible for all the customer-facing activities of the products, including underwriting and servicing.
“Buy now, pay later has become a major asset to PayPal’s checkout experience, driving engagement, payment volume growth, and repeat use while delivering high-value customers to our merchants,” says Gabrielle Rabinovitch, senior vice president, acting chief financial officer at PayPal.
“Our collaboration with KKR will allow us to accelerate our PayPal Pay Later originations alongside market demand in Europe while preserving free cash flow for other strategic initiatives.”
Since launching BNPL offerings in 2020, PayPal claims to have issued more than 200 million loans to over 30 million customers in eight markets. In 2022, it processed more than $20 billion worth of BNPL payment volume globally, up approximately 160% from 2021.
The transaction, subject to certain conditions, is expected to close in the second half of 2023. On closing, PayPal hopes to initially generate around $1.8 billion in proceeds, which it will put towards boosting its capital return to shareholders and general corporate purposes.
PayPal plans to allocate approximately $1 billion to incremental share repurchases in 2023, contributing to an updated outlook of approximately $5 billion in total share repurchases this year.
