Global investment firm KKR has entered into an exclusive multi-year deal with PayPal to purchase up to €40 billion of buy now, pay later (BNPL) loans originated by PayPal in Europe. The agreement allows KKR’s private credit funds and accounts to acquire PayPal’s European BNPL portfolio, including future originations of eligible BNPL loans.
Facts
- PayPal has agreed to sell up to €40 billion of European BNPL loans to KKR as part of an exclusive multi-year deal.
- 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 the close of the transaction.
- PayPal launched its BNPL offerings in 2020 and claims to have issued over 200 million loans to more than 30 million customers in eight markets.
- In 2022, PayPal processed over $20 billion worth of BNPL payment volume globally, experiencing growth of approximately 160% compared to 2021.
- PayPal will remain responsible for customer-facing activities of the BNPL products, including underwriting and servicing.
- The collaboration with KKR will enable PayPal to accelerate its PayPal Pay Later originations in Europe while preserving free cash flow for other strategic initiatives.
- The transaction is expected to close in the second half of 2023, subject to certain conditions. PayPal anticipates generating around $1.8 billion in proceeds, which will be used for capital return to shareholders and general corporate purposes. Additionally, PayPal plans to allocate approximately $1 billion to incremental share repurchases in 2023, totaling approximately $5 billion in total share repurchases for the year.
