Brookfield Boosts Barclays with £400M Investment to Expand Merchant Payments Business

Barclays and Brookfield Asset Management have entered into a strategic partnership aimed at revolutionizing Barclays’ payment acceptance division, a critical component of the UK economy. This collaboration is set to modernize the business, previously known as the merchant acquiring arm, under the new Barclaycard Payments brand.

Transforming Payment Acceptance

The partnership between Barclays and Brookfield focuses on enhancing the payment acceptance services that are vital for processing billions of pounds in transactions annually. The goal is to:

• Modernize Barclays’ payment acceptance operations
• Improve client offerings and technological capabilities
• Drive financial performance through strategic transformation

Investment and Growth Strategy

Barclays plans to invest approximately £400 million into the newly formed entity over the next three years. This investment will be complemented by Brookfield’s extensive expertise in private equity, particularly in:

• Payments technology
• Operational transformation
• Corporate carve-outs

This collaboration is designed to position Barclays for long-term growth in the rapidly evolving FinTech sector.

Performance Incentives and Ownership Structure

As part of the agreement, Brookfield will offer strategic and operational support throughout this transformation. A significant feature of the deal includes a performance-based financial incentive structure, ensuring both parties are aligned in their goals.

Furthermore, Brookfield has the option to acquire up to a 70% stake in the business between the third and seventh year of the partnership, contingent upon Barclays recovering its investment. Upon this acquisition, Brookfield’s initial performance incentive will convert into an additional 10% shareholding, resulting in approximately 80% ownership, while Barclays retains a 20% interest.

Barclaycard Payments Brand

The business will operate under the Barclaycard Payments brand and will exclusively provide payment acceptance services to Barclays clients for at least a decade. Despite the substantial investment, Barclays assures that this move will not materially impact its financial guidance or performance targets.

A Milestone for Brookfield Financial Infrastructure Partners

This transaction marks the first deal for Brookfield Financial Infrastructure Partners (BFIP), a division focused on digital financial assets and infrastructure. Brookfield has a proven track record in financial infrastructure, having invested over $5 billion in similar ventures, including:

• The carve-out of Magnati with First Abu Dhabi Bank
• The take-private of Network International

Leadership Insights

Matt Hammerstein, CEO of Barclays UK Corporate Bank, stated, “Our partnership with Brookfield illustrates our commitment to transforming our payment acceptance business, enabling us to better serve our clients and unlock value.” He emphasized the necessity for integrated connectivity and tailored technological solutions in the payments landscape.

Sir Ron Kalifa, Vice Chair and Head of Financial Infrastructure at Brookfield, added, “Adopting a digital-first and data-led approach is essential for delivering world-class solutions. We are eager to leverage our global payments expertise to collaborate with Barclays and foster operational transformation.”

For more information on Barclays’ initiatives, visit their official website.