PayPal to Sell European BNPL Loan Receivables to KKR, Increase Stock Buybacks

By Will Feuer

PayPal said it has inked a multi-year deal to sell substantially all of its European buy now, pay later loan portfolio to investment firm KKR, allowing the payments company to repurchase more of its shares.

The companies said they have signed a EUR3 billion, or roughly $3.3 billion, replenishing loan commitment. Through the commitment, private credit funds and accounts managed by KKR will buy up to EUR40 billion of BNPL loan receivables originated by PayPal in France, Germany, Italy, Spain, and the United Kingdom.

PayPal expects the deal to initially generate about $1.8 billion, which the company plans to use to return capital to shareholders. PayPal said the deal is already contemplated in its full-year earnings and adjusted earnings outlook.

Under the terms of the deal, KKR will buy substantially all the European BNPL loan portfolio held on PayPal's balance sheet and will also buy future originations of eligible BNPL loans. PayPal will remain responsible for customer-facing activities.

Gabrielle Rabinovitch, acting chief financial officer of PayPal, said the deal would allow PayPal to accelerate BNPL originations to keep pace with market demand in Europe while preserving cash for other initiatives.

The deal is expected to close in the second half of 2023. Once the deal closes, PayPal expects to allocate about $1 billion toward incremental share buybacks in 2023. For the full year, the company now expects to repurchase about $5 billion in stock.

Shares of PayPal rose 1.3% to $67.30 in premarket trading.

Write to Will Feuer at [e-mail]

(END) Dow Jones Newswires

June 20, 2023 07:37 ET (11:37 GMT)

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