Global investment firm KKR has announced an exclusive multi-year deal to buy up to €40 billion of buy now pay later (BNPL) loans from PayPal.
KKR’s private credit funds and accounts will acquire all of PayPal’s European BNPL portfolio at close of transaction, along with future originations of eligible BNPL loans.
PayPal will remain responsible for customer-facing activities, including underwriting and servicing associated with European BNPL products.
The agreement is subject to certain conditions and is expected to complete in the second half of this year.
PayPal said the agreement will initially generate around $1.8 billion. The company plans to spend around $1 billion on incremental share buybacks this year increasing the predicted total to $5 billion in 2023.
PayPal launched its first BNPL products in 2020. The company claims it has issued more than 200 million loans in eight markets around the world. In 2022 it processed more than $20 billion of BNPL payment volume, an increase of 160 per cent from 2021.
“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, 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.”
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