(Bloomberg) — Barclays Plc will work with Brookfield Corp. to offload some of its payments business, as part of the lender’s push to boost returns.
Barclays agreed to inject £400 million ($529 million) as part of a deal to turn the payments unit into a standalone company, according to a statement Thursday.
Brookfield will be entitled to a financial incentive, linked to performance, and after three years will have a four-year window to acquire as much as 80% of the payments company. If the sale goes ahead, Barclays expects to fully recover its investment in the overhaul and retain the other 20%.
“Our partnership with Brookfield recognizes the opportunity within our business to go beyond the foundations we have built to date,”said Matt Hammerstein, head of Barclays’ UK corporate bank.
Under Chief Executive Officer C.S. Venkatakrishnan, Barclays has pledged to invest more in its UK business as well as its US consumer offerings in order to buoy returns that have long lagged rivals. To pull that off, it’s been shedding non-core operations.
The deal to offload a portion of its payments business, which Barclays said won’t affect have a material effect on its guidance, comes just months after Barclays completed a deal to dispose of its German consumer finance division. The bank has also in recent months agreed to sell a portfolio of non-performing Italian mortgages.
The British bank is following in the footsteps of many of its European rivals by turning focus away from the merchant-acquiring business. These divisions, which help businesses handle electronic payments, have typically been sold to rival payment firms or private equity funds that have merged them into bigger platforms.
Brookfield has been seeking to further expand in financial infrastructure after its £2.2 billion purchase of Middle Eastern payments processor Network International Holdings Plc in 2023. That same year, the Canadian asset manager hired former Worldpay CEO Ron Kalifa as vice chair and head of financial infrastructure investments to beef up its presence in the sector.
Barclays’ merchant acquiring business provided payment terminals and linked up with digital wallets, according to a presentation on the bank’s website. It was considered the third biggest acquirer in Europe, the presentation shows.
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