LONDON – Barclays (NYSE: BCS) is finding it difficult to sell a stake in its British merchant payments business due to diverging views on its valuation, four people with knowledge of the matter told Reuters, complicating the bank’s plans to revamp the unit.
Brookfield Asset Management, which manages assets worth more than $825 billion, was one of the private equity firms that dropped out of bidding in recent months mainly over the price being sought by Barclays, two of the people said.
Talks have been complicated by the takeover of Takepayments, which is one of Barclays’ partners in payments, one of the two people and a fourth said, adding this could reduce revenues.
Brookfield declined to comment.
Britain’s third-biggest bank said it did not comment on speculation and would provide updates “in due course”.
Some offers also fell short of Barclays’ hopes in part because of the declining market share of the business and the investment needed to bring it back to growth, they said.
Barclays (NYSE: BCS) remains open to selling a stake in the business, said one of the people, who were all speaking on condition of anonymity because the talks are private.
The difficulties come after a sell-off in the European payments sector over the last three years, triggered by concerns over revenue outlooks at Worldline, Nexi, and Adyen. The sale process is complex because of the technology and the financial arrangements involved, Barclays Chief Executive C.S. Venkatakrishnan said in June when asked about progress.
“As we confirmed at our February investor update, we are exploring a number of options for investment in our market-leading merchant acquiring business, including strategic partnerships,” a spokesperson said this week.
In December last year, Barclays said it was exploring options for the payments business and had written down its value by 300 million pounds ($392 million).
The sale was part of the broader review of Barclays’ global payment activities spanning merchant acquiring and credit card services. It sold its German consumer finance business to Austrian bank BAWAG in July.
That sale was expected to release about 4 billion euros ($4.32 billion) of risk-weighted assets and raise Barclays’ CET1 ratio – a capital strength measure – by about 10 basis points.
It has been targeting private equity to buy a majority stake in the UK business after initial approaches to competitors yielded muted interest, Reuters reported in February.
Barclays (NYSE: BCS) initially hoped to value the business at more than 2 billion pounds ($2.5 billion), Reuters previously reported.
But by the time sale documents were distributed to potential bidders, that valuation had slipped to above 1 billion pounds ($1.3 billion), two of the four people said.
($1 = 0.7644 pounds)
(Source: ReutersReuters)
