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Barclays has concluded the difficult process of offloading the units by signing a contract with Brookfield asset management, which allows private equity companies to become the majority owner of the bank’s payments business.
The UK-based lender announced the deal on Thursday, setting a seven-year timeline where Canadian companies can buy 80% of their business stakes.
Barclays and Brookfield are set up for banks to invest £400 million, most of which will be deployed during the first three years of the partnership, aiming to set up payment operations as standalone units over time.
The sale of payment units, previously known as Barclays’ merchant acquisition business, is part of a strategic overhaul by CEO CS Venkatakrishnan to refocus the bank’s UK operations and improve performance.
Barclays has been looking at strategic options for its business for over a year, but Venkatakrishnan said last summer that the process is complicated due to certain financial arrangements. Merchant acquisition businesses focus primarily on payment processing, including cards, online and contactless. The bank also offers other products, such as fraud protection and systems integration for retailers.
As part of the “Strategic Partnership,” announced Thursday, Brookfield will acquire the option to buy 70% of the stake in its payments business at its then market valuation three years later. If a sale is made, Brookfield can convert another incentive into an additional 10% stock.
Sales are subject to certain conditions. This includes Barclays regaining its full investment in the business. The bank said it expects to hold about 20% of its shares.
Barclays announced that it has acquired a £350 million prize in its full year results in 2023, related to its payments business and its German consumer finance business. The bank sold the latter to Austrian Bank Bawag Group last year, but did not disclose its valuation.
Brookfield pursues a drive to pay to diversify beyond its vast real estate portfolio. The company hired sir Ron Kalifa, former head of payment group WorldPay, as head of financial infrastructure strategy in 2023.
The Barclays deal was the first by Brookfield Financial Infrastructure Partners, and began investing in digital assets by a private equity company.
