KKR to purchase up to €40 billion of eligible current and
future PayPal Pay Later loans originated in Europe
PayPal expects to allocate approximately $1 billion to incremental share repurchases this
year; updated outlook from approximately $4
billion to approximately $5
billion in total share repurchases in 2023
SAN
JOSE, Calif. and NEW
YORK, June 20, 2023 /PRNewswire/ -- PayPal
Holdings, Inc. (NASDAQ: PYPL) and KKR, a leading global investment
firm, today announced the signing of an exclusive multi-year
agreement for a €3 billion replenishing loan commitment under which
private credit funds and accounts managed by KKR will purchase up
to €40 billion of buy now, pay later (BNPL) loan receivables
originated by PayPal in France,
Germany, Italy, Spain,
and the United Kingdom. Under the
terms of the agreement, KKR's private credit funds and accounts
will acquire substantially all the European BNPL loan portfolio
held on PayPal's balance sheet at the close of the transaction and
will also acquire future originations of eligible BNPL loans.
PayPal will remain responsible for all customer-facing activities,
including underwriting and servicing, associated with its European
BNPL products.
![PayPal Logo (PRNewsfoto/PayPal) PayPal Logo (PRNewsfoto/PayPal)](https://mma.prnewswire.com/media/946166/PayPal_2023_Logo.jpg)
While the concept of split installment payments for consumer
purchases has been around for decades and online consumer financing
has been a strategic offering of PayPal since 2008, BNPL has
dramatically increased in popularity over the past several years.
Since launching its first BNPL offering in 2020, PayPal has become
an industry leader with its PayPal Pay Later products, issuing more
than 200 million loans to over 30 million customers in eight
markets around the world. In 2022, PayPal processed more than
$20 billion of BNPL payment volume
globally, up approximately 160% 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 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. This
transaction is yet another example of our disciplined approach to
capital allocation."
KKR is funding the transaction through its private credit funds
and accounts.
"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," said
Dan Pietrzak, global head of private
credit at KKR. "We look forward to growing our relationship further
and serving the financing needs of consumers across Europe through this transaction."
"We are thrilled to deepen our footprint in consumer finance
through this transaction and to work with one of the leading
players in this space," said Vaibhav Piplapure, a managing director
at KKR. "We believe that PayPal Pay Later offers a differentiated
experience that positions PayPal to capture additional share in
this growing market."
Subject to certain conditions, this transaction is expected to
close in the second half of 2023. Upon closing, PayPal expects this
transaction to initially generate approximately $1.8 billion of proceeds to be used for a
combination of increased capital return to shareholders and general
corporate purposes. The transaction is already contemplated in
PayPal's full year 2023 guidance for GAAP and non-GAAP earnings per
share, and non-GAAP operating margin announced on May 8, 2023. Following closing, PayPal expects to
allocate approximately $1 billion to
incremental share repurchases in 2023, contributing to an updated
outlook of approximately $5 billion
in total share repurchases this year.
KKR Capital Markets structured and arranged the debt for the
transaction. Morgan Stanley & Co. LLC acted as the financial
and structuring advisor to PayPal. Freshfields Bruckhaus Deringer
LLP, Pérez-Llorca, and Allen & Overy Luxembourg acted as legal
advisors to PayPal. Latham & Watkins LLP served as legal
counsel to KKR.
About PayPal
PayPal has remained at the forefront of
the digital payment revolution for more than 20 years. By
leveraging technology to make financial services and commerce more
convenient, affordable, and secure, the PayPal platform is
empowering hundreds of millions of consumers and merchants in more
than 200 markets to join and thrive in the global economy. For more
information, visit https://www.paypal.com.
Forward Looking Statements About PayPal
This
announcement contains "forward-looking" statements within the
meaning of applicable securities laws. Forward-looking statements
and information relate to future events and future performance and
reflect, among other things PayPal's expectations regarding the
anticipated benefits of this transaction, the timing of the closing
of the transaction, and anticipated incremental share repurchases.
Forward looking statements may be identified by words such as
"may," "will," "would," "should," "could," "expect," "anticipate,"
"believe," "estimate," "intend," "continue," "strategy," "future,"
"opportunity," "plan," "project," "forecast," and other similar
expressions.
Forward-looking statements involve risks and uncertainties which
may cause actual results to differ materially from the statements
made, and, accordingly, readers should not place undue reliance on
forward-looking statements and information. Factors that could
cause or contribute to such differences include, but are not
limited to, the failure to satisfy the conditions to the completion
of the transaction and the acquisition of future originations, the
possibility that the transaction may not be completed in a timely
manner or at all, the reaction of competitors to the transaction,
economic and political conditions, including in the relevant
markets, the future growth of PayPal's BNPL business, and the
possibility that operationalizing the transaction post-closing may
be more difficult than expected.
More information about these and other factors that could
adversely affect PayPal's results of operations, financial
condition and prospects or that could cause actual results to
differ materially from those expressed or implied in
forward-looking statements can be found in PayPal Holdings, Inc.'s
most recent Annual Report on Form 10-K, Quarterly Reports on Form
10-Q, Current Reports on Form 8-K and other filings with the
Securities and Exchange Commission (the "SEC"), and its future
filings with the SEC.
The forward-looking statements contained in this announcement
speak only as of the date hereof. PayPal expressly disclaims
any obligation or undertaking to disseminate any updates or
revisions to any forward-looking statements contained herein to
reflect any change in the expectations with regard thereto or any
change in events, conditions, or circumstances on which any such
statement is based.
About KKR
KKR is a leading global investment firm that
offers alternative asset management as well as capital markets and
insurance solutions. KKR aims to generate attractive investment
returns by following a patient and disciplined investment approach,
employing world-class people and supporting growth in its portfolio
companies and communities. KKR sponsors investment funds that
invest in private equity, credit and real assets and has strategic
partners that manage hedge funds. KKR's insurance subsidiaries
offer retirement, life and reinsurance products under the
management of Global Atlantic Financial Group. References to KKR's
investments may include the activities of its sponsored funds and
insurance subsidiaries. For additional information about KKR &
Co. Inc. (NYSE: KKR), please visit KKR's website
at www.kkr.com and on Twitter @KKR_Co.
Contacts
Investors
For PayPal:
investorrelations@paypal.com
Media
For PayPal:
Josh Criscoe, Taylor Watson and Sabrina Winter
mediarelations@paypal.com
For KKR:
KKR Americas:
Julia Kosygina
+1 212-750-8300
Media@kkr.com
KKR EMEA:
Annabel Arthur
+44 20 7839 9800
kkrpr-uk@kkr.com
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SOURCE PayPal, Inc.