PayPal to sell $44B European BNPL loan portfolio to KKR
I going to make a greatest artwork as I can, by my head, my hand and by my mind.
Under a new multi-year â¬3B (US$3.3B) replenishing loan commitment, private credit funds and accounts managed by KKR (NYSE:KKR) will buy up to â¬40B of buy now, pay later (BNPL) loan receivables originated by PayPal Holdings (NASDAQ:PYPL) in France, Germany, Italy, Spain, and the U.K., the companies announced on Tuesday.
KKR's (KKR) private credit funds and accounts will acquire substantially all of the European BNPL loan portfolio held on PayPal's (PYPL) balance sheet at the close of the transaction and will also acquire future originations of eligible BNPL loans. PayPal will continue to conduct customer-facing activities, including underwriting and servicing associated with its European BNPL products.
For PayPal (PYPL), the deal takes some risk off its balance sheet and frees up cash. "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," said Gabrielle Rabinovitch, senior vice president and acting chief financial officer at PayPal (PYPL).
PayPal stock gained 1.5% in Tuesday premarket trading.
Upon closing, PayPal (PYPL) expects the transaction to initially produce ~$1.8B of proceeds. The company expects to use ~$1B for incremental share repurchases in 2023, bringing its updated share repurchase outlook to $5B for the year.
The KKR (KKR) transaction is already included in PayPal's (PYPL) full-year 2023 guidance for GAAP and non-GAAP EPS and non-GAAP operating margin.
The transaction is expected to close in H2 2023.
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