PayPal Holdings, Inc. and KKR, a global investment firm, 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, the statement 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,” 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.”
“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.”
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.
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