PayPal said on Tuesday that private equity firm KKR has agreed to buy a sizeable amount of its buy now, pay later (BNPL) loans in Europe, up to 40 billion euros ($43.71 billion).
Even though BNPL is still widely used by millennials and Gen Z customers following the pandemic-driven increase in usage, the sector’s fortunes changed last year as rising interest rates and intense inflation lowered consumer purchasing power.
On hearing about the sale, which is anticipated to finalize in the second half of the year and yield approximately $1.8 billion in gross profits, shares of PayPal rose 1.5% in early morning trading.
The business claimed that the deal was already factored into its May growth prediction for adjusted profit, which was roughly 20% on a per-share basis and exceeded Wall Street expectations.
PayPal anticipates allocating approximately $1 billion in additional share repurchases in 2023 after the transaction closes, adding to an updated forecast of approximately $5 billion in share repurchases this year.
Globally, PayPal processed more than $20 billion in BNPL payments in 2022, a nearly 160% increase over 2021. PayPal has given more than 200 million loans to more than 30 million consumers worldwide since introducing its BNPL business in 2020.
The business declared that it will continue to be in charge of all customer-facing tasks, such as underwriting and service related to its European BNPL products.
