Shares of the fintech company, PayPal Holdings (NASDAQ: PYPL) spiked in pre-market trading at the time of publishing on Tuesday after the company announced that its €40 billion worth of buy now, pay later (BNPL) loan receivables in Europe including in countries like France, Germany, Italy, Spain, and the United Kingdom will be purchased by KKR. As a part of this multi-year agreement with KKR, the investment firm has committed to replenishing €3 billion of loans in addition to the above purchase of loan receivables.
Pick the best stocks and maximize your portfolio:
- Discover top-rated stocks from highly ranked analysts with Analyst Top Stocks!
- Easily identify outperforming stocks and invest smarter with Top Smart Score Stocks
PayPal stated in its press release that as a part of this 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.”
PYPL expects this transaction to close in the second half of this year and anticipates that it is likely 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 company has already factored in this transaction in its FY23 guidance when it comes to its earnings per share (GAAP and adjusted) and adjusted operating margin.
After the closing of this transaction, 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.”
Analysts are cautiously optimistic about PYPL stock with a Moderate Buy consensus rating based on 21 Buys and 11 Holds.
