PayPal Holdings
announced a deal in which KKR-managed funds and accounts will purchase up to €40 billion of buy now, pay later loan receivables originated in Europe, which should allow for the repurchase of more stock this year by the payments company.
PayPal
(ticker: PYPL) said in a news release Tuesday that
KKR
‘s private credit funds and accounts will acquire almost all of the European BNPL loan portfolio that is held on
PayPal
‘s balance sheet, and will also acquire future originations of eligible BNPL loans.
The digital payments company also said that the transaction is already reflected in its full-year earnings guidance, but when the deal closes it expects to allocate an additional $1 billion to share repurchases in 2023. PayPal now expects $5 billion in total share repurchases for the year.
The deal is expected to close in the second half of 2023.
BNPL is a type of loan that splits the payment for a consumer product into multiple installments spread over several months. PayPal gives customers the option to utilize BNPL through both a Pay in 4 option and a Pay Monthly plan. Pay in 4 allows shoppers to split purchases into four bi-weekly payments. Pay Monthly breaks payments down into smaller amounts for up to 24 months.
“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,” said Gabrielle Rabinovitch, acting chief financial officer of 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,” Rabinovitch added.
Shares of PayPal gained 1.8% on Tuesday. The stock has fallen about 5% this year.
Write to Angela Palumbo at [email protected]
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