UK-based banking group Barclays has entered into a multi-year agreement with Brookfield Asset Management to develop its payment acceptance operations into a separate entity.
The deal is intended to support the future growth of Barclays’ merchant acquiring activities, which process significant volumes of electronic transactions for a wide range of UK-based and international businesses.
The partnership will see Brookfield contribute operational and financial expertise to support the restructuring and scaling of the business.
Barclays, which will initially retain full ownership, is expected to invest approximately £400m into the entity, with most of that capital allocated in the first three years of the arrangement.
The parties aim to expand the business’s service offerings and enhance its infrastructure to meet changing market requirements in payment processing and technology.
The payments division, which was previously referred to as Barclays’ merchant acquiring business, currently operates under the “Barclaycard Payments” brand. It facilitates point-of-sale, online, and contactless transactions for clients ranging from small enterprises to multinational corporations.
The division’s portfolio includes payment terminals, e-commerce gateways, foreign exchange services, data and analytics tools, and fraud prevention technologies.
Barclays UK corporate bank CEO Matt Hammerstein 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.”
According to terms of the agreement, Brookfield may acquire up to a 70% stake in the standalone business between the third and seventh years of the partnership. This will be subject to predefined financial conditions, including full recovery of Barclays’ initial investment.
If that transaction is executed, Brookfield would be granted an additional 10% ownership by converting its original incentive structure into equity, bringing its total interest to approximately 80%. Barclays would maintain a minority stake of around 20%.
The agreement includes a long-term commercial arrangement under which the new standalone entity will remain the exclusive payment acceptance provider to Barclays’ clients for a minimum of 10 years. The branding and client-facing operations will continue under the Barclaycard Payments name during this period.
The payments business will continue to be reported under the “Head Office” segment in Barclays’ group financial results. The bank confirmed that the partnership and investment will not materially affect its current financial guidance or targets.
This initiative also represents the first deployment under Brookfield Financial Infrastructure Partners, a strategy within Brookfield’s private equity division focused on investments in digital infrastructure that underpins the movement of capital across global financial systems.
Brookfield vice chair and financial infrastructure head Ron Kalifa 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.”
