Barclays and Brookfield's Payment Tech Play: A Strategic Shift with Big Stakes
3min read Barclays PLC (LON:BARC) and Brookfield Asset Management (NYSE:BAM) have unveiled a landmark partnership that redefines Barclays’ approach to its payment acceptance business, while positioning Brookfield as a major player in the UK’s digital finance infrastructure. The deal, announced on April 17, 2025, signals a bold strategic pivot for Barclays to simplify its operations and a new growth avenue for Brookfield in a sector it has been quietly building up for years.
The Deal Unpacked
Under the terms, Barclays will spin off its payment acceptance division—handling everything from merchant transactions to fraud prevention—into a standalone entity called Barclays Payments. Barclays will invest £400 million ($530 million) in the business, with Brookfield providing operational expertise and capital to fuel its transformation. Over time, Brookfield can acquire a 70% stake after Barclays recoups its initial investment, eventually owning 80% if certain performance thresholds are met. Barclays retains a 20% stake and a 10-year exclusivity deal to keep Barclays Payments as its primary payment provider.
This structure allows Barclays to shed a non-core asset while maintaining skin in the game, while Brookfield gains a foothold in a market expected to grow as the UK’s digital economy expands. The partnership also aligns with Brookfield’s broader $5 billion investment strategy in financial infrastructure, including prior stakes in payment processors like Network International and Magnati.
Why Barclays is Selling (Most of) Its Stake
Barclays has been methodically offloading non-core assets to focus on its core banking businesses—a strategy CEO Matt Hammerstein described as creating a “simpler, better, more balanced bank.” The payment acceptance division, while profitable, is a classic “infrastructure” business with predictable cash flows but limited upside in Barclays’ core retail and corporate banking segments. By partnering with Brookfield, Barclays can redirect capital to higher-margin areas like wealth management and investment banking, while still benefiting from the standalone entity’s growth.
The financial terms underscore this calculus: Barclays’ £400 million investment is modest relative to its £150 billion market cap, but the potential upside—should Brookfield’s operational improvements boost returns—could be significant. For Brookfield, the deal is a natural extension of its strategy to acquire assets that benefit from secular trends like digital transformation and global e-commerce growth.
Brookfield’s Bigger Play: Building a Payment Infrastructure Powerhouse
Brookfield’s involvement here isn’t just about a single deal. The partnership marks its first move under its newly launched Brookfield Financial Infrastructure Partners fund, which targets digital infrastructure critical to financial systems. Ron Kalifa, Brookfield’s head of financial infrastructure, emphasized the firm’s aim to create a “market leader in the UK’s digital economy” through a “digital-first, data-led approach.”
This isn’t just buzz. Brookfield’s prior payment-related acquisitions—like Network International, a Middle Eastern payment processor, and Magnati, a digital financial services platform—suggest it’s building a global network of payment gateways and fintech tools. The Barclays deal adds a major Western market presence and a brand name (Barclaycard Payments) with existing scale.
The financial terms also incentivize Brookfield to maximize performance: its 10% equity kicker upon sale hinges on the business hitting targets, aligning its interests with Barclays’. This structure reduces the risk of Brookfield underinvesting in the business, as its reward grows with success.
Investment Implications: Winners and Risks
For Barclays shareholders, the deal is a mixed bag. While shedding a non-core asset could improve its capital efficiency and valuation multiples, the immediate financial impact is muted—the business remains under Barclays’ “Head Office” segment, which already contributes minimal earnings. The stock’s reaction, however, may hinge on whether the deal signals broader progress in Barclays’ simplification efforts.
Brookfield, meanwhile, is taking a calculated risk. The 70% stake option is contingent on Barclays recouping its investment, meaning Brookfield’s upside is tied to the business’s profitability. If Barclays’ initial £400 million isn’t recovered within the agreed timeframe, Brookfield’s path to majority ownership could be blocked. Still, Brookfield’s track record—its Network International acquisition generated a 30% return in five years—suggests it can extract value here.
The broader market impact is equally notable. Barclays Payments, now unshackled from a bank’s regulatory and cost constraints, could compete more aggressively with rivals like Worldpay and PayPal. The 10-year exclusivity clause with Barclays also ensures a steady revenue stream, though the business’s long-term success will depend on its ability to innovate in areas like AI-driven fraud detection and omnichannel payments.
Conclusion: A Deal with Built-In Catalysts
This partnership is a win-win with clear catalysts for both parties. For Barclays, it’s a step toward its stated goal of focusing on its core businesses, while reducing the drag of a lower-margin division. For Brookfield, it’s a foothold in a $2.1 trillion global payments market, with a scalable platform to apply its operational expertise.
The data underscores this: Barclays’ stock has underperformed the FTSE 100 by 12% over the past year, reflecting investor frustration with its slow progress in restructuring. The deal could be the first step to closing that gap. Meanwhile, Brookfield’s financial infrastructure investments, including its 2021 acquisition of Network International, have historically outperformed its broader portfolio.
The key risks—Barclays’ ability to recover its investment and Brookfield’s operational execution—are manageable given the structure’s incentives. All told, this deal isn’t just about payments—it’s about redefining who wins in the digital finance era. For investors, it’s a bet on Barclays’ discipline and Brookfield’s operational alchemy, both of which have strong precedents.
