Barclays and Brookfield Asset Management Ltd., through its Financial Infrastructure strategy, today announce a long-term strategic partnership to grow and transform Barclays’ payment acceptance business (the “Business”), previously referred to as its merchant acquiring business. Barclays and Brookfield will work to create a standalone entity over time.
Barclays has extensive client relationships and experience of UK payments which, in an environment of continuous innovation, will benefit from Brookfield’s global private equity expertise in payments, technology, operational transformation and corporate carve-outs, to ensure that the Business is strategically positioned for long-term growth.
The Business provides critical infrastructure to the UK economy, processing billions of pounds of payments annually for small businesses, and domestic and international corporate clients. The Partnership will drive business growth by broadening the range of services offered and enhancing the experience for both existing and prospective clients. As a result, the Partnership is intended to support meaningfully improved financial performance of the Business.
Barclays plans to invest approximately £400 million in the Business, the majority 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 performance of the Business. This drives alignment between the partners and reflects Brookfield’s future commitment and contribution to the transformation.
The Partnership provides Barclays with a well-defined path to realising value from the Business over time. After year three of the Partnership, and up to its seventh anniversary, Brookfield may acquire an approximately 70 percent ownership interest in the Business (the “Sale”) 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 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 percent.
Barclays strongly believes in the long-term prospects of the Business and, following the intended Sale, expects to retain an ownership interest of approximately 20 percent. 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.
The Partnership and related investment are not expected to have any material impact on Barclays’ current financial guidance or targets.
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. 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.
Matt Hammerstein, CEO, Barclays UK Corporate Bank said: “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.”
Sir Ron Kalifa, Vice Chair and Head of Financial Infrastructure, Brookfield said: “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.”
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Brookfield Asset Management Ltd. (BAM) is a leading global alternative asset manager, headquartered in New York, with over $1 trillion of assets under management across renewable power and transition, infrastructure, private equity, real estate, and credit. The company invest client capital for the long-term with a focus on real assets and essential service businesses that form the backbone of the global economy. BAM offer a range of alternative investment products to investors around the world — including public and private pension plans, endowments and foundations, sovereign wealth funds, financial institutions, insurance companies and private wealth investors.
Brookfield’s private equity business, which manages over $140 billion of assets under management focuses on driving operational transformation in companies providing essential products and services.
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