Barclays and Brookfield's Strategic Payments Pivot: A Deal Reflecting Industry Evolution
15min read The UK’s Barclays has taken a decisive step in reshaping its strategic portfolio with the agreement to sell a significant stake in its UK payments business to Brookfield Asset Management. The deal, finalized in late April 2025, underscores a broader shift in the banking sector’s approach to non-core assets and highlights Brookfield’s growing ambitions in financial infrastructure.
Barclays’ Exit Strategy: Pruning to Focus on Core Banking
Barclays’ decision to divest its UK payments business—described as a “non-core” asset—aligns with its broader strategy to streamline operations and redirect capital toward higher-margin banking activities. The payments unit, which processes billions of pounds annually for small businesses and corporations, was once a cornerstone of the bank’s retail offerings. However, after failing to secure a buyer willing to meet its initial valuation target of over £2 billion in late 2023, Barclays opted for a structured partnership with Brookfield.
The deal involves spinning off the payments business into a standalone entity, with Barclays initially retaining full ownership for three years. Over time, Brookfield may acquire up to 70% equity, contingent on Barclays recouping its £400 million initial investment. Barclays will retain at least a 20% stake, preserving a financial tie to a business it once sought to fully exit. This cautious approach reflects the complexities of valuing payments infrastructure amid market skepticism about the sector’s growth potential.
Barclays’ shares have remained relatively stable over the past year, suggesting investors view the deal as a pragmatic move rather than a negative catalyst. The bank’s financial guidance remains unaffected, as the transaction is structured to avoid near-term cash injections beyond its £400 million investment.
Brookfield’s Play for Financial Infrastructure Dominance
For Brookfield, the deal represents a strategic bet on the future of payments infrastructure. The firm has been aggressively expanding its footprint in this space, including its 2024 acquisition of Network International Holdings and its hiring of former Worldpay CEO Ron Kalifa to lead its financial infrastructure investments. Brookfield’s $5 billion commitment to tech-driven payments—announced in early 2024—aims to capitalize on the digitalization of global economies, a theme amplified by the pandemic and shifting consumer behaviors.
The agreement with Barclays follows Brookfield’s earlier withdrawal from bidding in 2024 due to valuation disputes and complications from Barclays’ acquisition of Takepayments. This time, Brookfield’s phased equity acquisition structure mitigates risk while allowing it to scale its stake as the business stabilizes. The deal also positions Brookfield to leverage its operational expertise to improve the unit’s profitability, potentially unlocking value in a sector where rivals like Worldline and Adyen have faced market skepticism over their growth trajectories.
Brookfield’s shares have risen 12% year-to-date, reflecting investor confidence in its infrastructure-focused strategy. The Barclays deal adds a high-quality, UK-centric asset to its portfolio, complementing its global payments investments.
Industry Context: The Great Payments Unwind
The Barclays-Brookfield deal mirrors a wider trend among European banks divesting payments businesses. Firms such as Lloyds Banking Group and Royal Bank of Scotland have similarly exited non-core payments operations, citing strategic misalignment and valuation challenges. Meanwhile, pure-play payments processors like Nexi and Worldline have struggled to meet growth expectations, with Nexi’s shares down 20% since 2022 amid slowing transaction volumes in key markets.
Deal Structure and Risks
The deal’s phased equity approach reflects both parties’ caution. Barclays’ three-year ownership period ensures operational control during a critical transition, while Brookfield’s 70% upside incentivizes long-term performance. However, risks remain: if Barclays fails to recover its £400 million investment, Brookfield’s maximum stake could be capped, reducing the deal’s strategic value. Additionally, the UK’s evolving regulatory environment—particularly around payment systems and cybersecurity—could impact the business’s profitability.
Conclusion: A Strategic Win for Both Sides, But Challenges Ahead
The Barclays-Brookfield partnership marks a milestone in the evolution of the payments sector. For Barclays, the deal crystallizes its focus on core banking while retaining upside in a high-value asset. For Brookfield, it secures a foothold in a market projected to grow at a 7.5% CAGR through 2030, per Allied Market Research.
However, the transaction’s success hinges on execution. Barclays must demonstrate the payments unit’s value recovery, while Brookfield faces the challenge of scaling profitability in a sector facing margin pressures and regulatory scrutiny. Investors should monitor Barclays’ ability to meet its £400 million return threshold and Brookfield’s broader performance in payments, particularly given its $5 billion commitment.
In a landscape where banks are shedding non-core assets and investors are demanding clarity on growth, this deal exemplifies a pragmatic path forward—one that balances strategic retrenchment with opportunistic expansion. The true test will be whether Barclays and Brookfield can turn a once-strategic liability into a cornerstone of the next generation of financial infrastructure.
