KKR Collaborates with PayPal in a Multi-Year €3B Deal to Accelerate BNPL Loan Originations in Europe

PayPal Holdings, Inc. PYPL and KKR & Co Inc KKR sign an exclusive multi-year agreement for a €3 billion replenishing loan commitment.

Under the replenishing loan commitment, 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. 

The deal states that KKR's private credit funds and accounts will acquire all of PayPal's European BNPL loan portfolio at the closure of the transaction, as well as future originations of qualifying BNPL loans.

Also Read: Navigating PayPal's Future: Analysts Deep Dive into its Potential for Margin Improvement and Growth Leveraging Next-Generation Product Set

"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," commented Gabrielle Rabinovitch, senior vice president and acting chief financial officer of PayPal.

KKR is funding the deal with private credit funds and accounts. PayPal anticipates that this deal would generate an initial $1.8 billion in cash, which will be utilized for increased capital return to shareholders and general corporate purposes. 

Following the closure, PayPal plans to allocate roughly $1 billion to incremental share repurchases in 2023, contributing to a revised forecast of approximately $5 billion in total share repurchases this year.

Price Action: PYPL shares are trading higher by 1.63% at $67.51 and KKR lower by 1.33% at 56.44 on the last check Tuesday.