PayPal, KKR announce exclusive multi-year agreement

PayPal Holdings (PYPL) and KKR (KKR) announced the signing of an exclusive multi-year agreement for a EUR3B replenishing loan commitment under which private credit funds and accounts managed by KKR will purchase up to EUR40B of buy now, pay later 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. 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.