Barclays, the British multinational bank, is strategically partnering with Brookfield Asset Management to transform Barclays’ payment acceptance business.
Through the partnership, Barclays and Brookfield will work to create a standalone entity over time, while ensuring that Barclays’ payment acceptance business is strategically positioned for long-term growth.
Barclays’ payment acceptance business provides critical infrastructure to the UK economy, processing billions of pounds of payments annually for small businesses, and domestic and international corporate clients.
This partnership will look to drive business growth by broadening the range of services offered and enhancing the experience for both existing and prospective clients.
Barclays plans to invest approximately £400million in the payment acceptance business, with the majority of this occurring during the first three years of the partnership. Meanwhile, Brookfield plans to provide expertise to support this transformation and will be entitled to a financial incentive, linked to the performance of the business.
“Finding a partner to support us in transforming our payment acceptance business, in a way that will enable us both to serve our clients’ interests better and pursue a path to releasing value from the business, demonstrates clear execution of our three-year plan to become a simpler, better and more balanced bank,” explained Matt Hammerstein, CEO of Barclays UK Corporate Bank. “We have a leading position in the UK, but we know that our payments clients are increasingly looking for integrated connectivity, an end-to-end service and tailored technological solutions from their payments providers.”
Payments plans for the future
Between the third and seventh year of the partnership, Brookfield may acquire an approximately 70 per cent ownership interest in the acceptance business at a market value to be determined at the time, and subject to certain pre-agreed conditions, including the full recovery by Barclays of its investment supporting the transformation.
Upon this sale by Barclays, Brookfield’s initial financial incentive, granted at the start of the partnership, will convert into an additional ten per cent shareholding in the Business, resulting in a total Brookfield shareholding of approximately 80 per cent.
Barclays strongly believes in the long-term prospects of the payment acceptance business and, following the intended sale, expects to retain an ownership interest of approximately 20 per cent. The business will continue to use the ‘Barclaycard Payments’ brand and will be the sole payment acceptance services provider to Barclays’ clients for a minimum of ten years.
Sir Ron Kalifa, vice chair and head of financial infrastructure at Brookfield, also added: “Payments systems need to adopt a digital-first and data-led approach to provide world-class solutions to clients. We’re excited to draw on our deep global payments expertise to partner with Barclays and together deliver the operational transformation required to create the market leader, well-positioned to drive the growth of the UK’s digital economy with innovative and integrated payment solutions.”
This marks the first transaction for Brookfield Financial Infrastructure Partners, a dedicated strategy part of Brookfield’s private equity business, focused on investing in digital assets that enable the movement of money and form the backbone of the world’s financial economy.
Previously, Brookfield has deployed over $5billion in transactions, which include a partnership with First Abu Dhabi Bank on the carve-out of Magnati payments, and the take-private of Network International, the leading Middle East merchant acquiring business.
