Barclays explores Plc (BARC.L) is exploring the possibility of selling a stake in its unit responsible for processing payments for UK merchants. The British bank is actively seeking a partner to help drive the growth of this business, according to four individuals familiar with the matter who spoke to Reuters.
The bank is contemplating the introduction of a partner with strategic expertise to facilitate business expansion and raise capital. However, the exact size of the stake to be divested has not yet determined, the sources noted.
The valuation of this business
The valuation of this business could potentially reach a minimum of 2 billion pounds ($2.5 billion). This estimate is based on projected earnings before interest, tax, depreciation
Barclays explores and amortization (EBITDA) of approximately 300 million pounds, as well as comparisons with similar transactions
as indicated by one of the sources.
These discussions, in their preliminary stages, are part of Barclays’ comprehensive assessment of its global payment activities, spanning across merchant acquiring and credit card services. The individuals, who requested anonymity, shared these insights.
Barclays has reportedly circulated a presentation about its domestic merchant acquiring unit to potential buyers, primarily specialized payments providers
during the summer. However, it’s important to note that these plans may still undergo alterations or potentially dropped entirely.
In response to these reports, a spokesperson for Barclays stated, “We don’t comment on speculation. Our businesses continue to perform well, and growing our global payments business is a priority for us.”
Earlier this year, Reuters had previously reported that Barclays, under the leadership of Chief Executive CS Venkatakrishnan, had initiated a review of its worldwide payments operations. This review is part of a broader debate within the bank on how to optimally allocate capital among its various divisions and enhance its share price.
To facilitate this evaluation, the bank enlisted consultants to prepare separate financial assessments for its domestic merchant acquiring operation, internally referred to as Project Hyperion
as mentioned by one of the sources.
This strategic move by Barclays aligns with the trend among other European banks, including Spain’s Banco Sabadell and Italy’s Intesa Sanpaolo
who have explored opportunities to monetize their payment-related operations.
Additionally, Barclays is also gauging interest in its German consumer finance operations, commonly known as Barclaycard Germany.
(Exchange rate: $1 = 0.7923 pounds)