PayPal and KKR, a well-known investment business, have officially sealed an agreement to loan €3 billion over several years. This money will be used to buy up to €40 billion of BNPL loan receivables from PayPal in France, Germany, Italy, Spain, and the UK.
KKR will purchase most of the loan payments PayPal has made in Europe. PayPal will handle customer activities, such as writing and managing these loans, for any future ones.
PayPal handled about $20 billion of buy-now-pay-later payments worldwide in 2022, a rise of around 160% from 2021.
Senior vice president, acting chief financial officer of PayPal, Gabrielle Rabinovitch, said:
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. 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. This transaction is yet another example of our disciplined approach to capital allocation.
KKR is providing money for the transaction from its own money pools and accounts.
Global head of private credit at KKR, Dan Pietrzak, said:
Having the ability to work exclusively with a scaled and high-quality strategic partner like PayPal is a testament to the strength and maturity of our Asset-Based Finance business. We look forward to growing our relationship further and serving the financing needs of consumers across Europe through this transaction.
The transaction is expected to close in the second half of 2023. When it is done, PayPal should get roughly $1.8 billion. This money will be used for sending back to shareholders and other company needs. PayPal has already included this transaction in its financial plan for the 2023 fiscal year.
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