Barclays (BCS) Considers Selling a Stake in UK Payments Unit
Barclays PLC BCS is considering selling a stake in the U.K. merchants’ payment processing unit. The move comes as the British bank looks for a partner to boost the business. The news was first reported by Reuters, citing people familiar with the matter.
While BCS has not yet decided on the exact stake that it might sell, the bank wants to bring in a partner with the strategic “know-how” to expand the business and raise capital, the people added.
One person with knowledge of the matter said that based on estimated earnings before interest, tax, depreciation and amortization of £300 million pounds and similar deals, the business could be worth at least £2 billion ($2.5 billion).
The discussions are in the early stage and are part of a review of Barclays’ global payment activities across merchant acquiring and credit card services.
Two of the people familiar with the matter said that over the summer, Barclays circulated a presentation to potential bidders (mainly specialist payments providers) on its domestic merchant acquiring business. However, the plan can be altered or dropped completely.
A Barclays spokesperson stated, “We don't comment on speculation. Our businesses continue to perform well and growing our global payments business is a priority for us.”
Barclay’s decision to divest a stake in the payment processing unit comes as the bank explores options to best allocate capital among its divisions and boost its share price.
Notably, Barclays has been striving to simplify operations and focus on core businesses over the past few years. With this aim, it has restructured its business into two divisions, and divested several non-strategic and less profitable operations globally.
The bank completed the ring-fencing of its investment banking operations in April 2018, while reintegrating its non-core division into the company’s core operations in July 2017. Driven by these initiatives, Barclays’ profitability is expected to improve over time.
In the past six months, shares of BCS have lost 9.9% against the industry’s growth of 0.4%.
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Currently, BCS carries a Zacks Rank #2 (Buy). You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.
Divestitures by Other Finance Firms
A few days ago, Standard Chartered PLC SCBFF announced that it entered definitive agreements to sell its global aviation finance leasing business to Aircraft Leasing Company (AviLease), owned by Saudi Arabia's Public Investment Fund. The news came after Standard Chartered announced in January 2023 that it was exploring options for the future ownership of its global aviation finance business.
AviLease provides leasing, trading and asset management services, and aims to expand rapidly to become one of the top ten leasing companies in the world as part of its business strategy.
Standard Chartered is expected to enhance its capital position through the sale, providing scope to continue focusing its efforts on areas where it is most differentiated.
Similarly, to progress toward achieving targets outlined at the Investor Day, The Goldman Sachs Group, Inc. GS entered an agreement to divest its Personal Financial Management (“PFM”) unit to the leading registered investment advisor, Creative Planning. Though the financial terms were not disclosed, the sale will result in a gain and is expected to be completed in the fourth quarter of 2023.
Goldman Sachs Asset Management will continue to provide investment solutions and services to Creative Planning’s wealth management teams as it continues to build a premier investment management platform.
GS acquired the PFM unit, which was formerly known as United Capital Financial Partners, Inc., in an all-cash deal valued at $750 million in 2019. At the time of acquisition, it had $25 billion of assets under management.
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