Brookfield Asset Management, Barclays partner for payment acceptance business

Barclays (BCS) and Brookfield Asset Management (BAM) announce a long-term strategic partnership to grow and transform Barclays’ payment acceptance business, previously referred to as its merchant acquiring business. Barclays and Brookfield will work to create a standalone entity over time. The companies said, “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 GBP 400M 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 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.