Barclays and Brookfield Asset Management through its Financial Infrastructure strategy, announced a long-term strategic partnership to grow and transform Barclays’ payment acceptance business, previously referred to as its merchant acquiring business. And Barclays and Brookfield will work to create a standalone entity over time.
Barclays will invest approximately £400 million in the business, most of which will occur during the first three years of the partnership. Brookfield will provide expertise to support this transformation and will be entitled to a financial incentive linked to the business’s performance. This will drive alignment between these partners and reflect Brookfield’s future commitment and contribution to the transformation.
This partnership provides Barclays with a well-defined path to realising value from the Business over time. And after year three of the partnership and up to its seventh anniversary, Brookfield may acquire about a 70% ownership interest in the business at a market value to be determined at the time and subject to certain pre-agreed conditions, including Barclays’ full recovery of its investment supporting the transformation.
Upon the sale by Barclays, Brookfield’s initial financial incentive (granted at the start of the partnership) will convert into an additional ten percent shareholding in the Business, resulting in a total Brookfield shareholding of approximately 80%.
Barclays believes in the long-term prospects of the Business and, following the intended sale, expects to retain an ownership interest of about 20%. This 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.
This marks the first transaction for Brookfield Financial Infrastructure Partners (BFIP), 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. And Brookfield has significant expertise in financial infrastructure, having deployed over $5 billion 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.
KEY QUOTES:
“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. 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. Our partnership with Brookfield recognises the opportunity within our business to go beyond the foundations we have built to date.”
- Matt Hammerstein, CEO, Barclays UK Corporate Bank
“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.”
- Sir Ron Kalifa, Vice Chair and Head of Financial Infrastructure, Brookfield
