Target Information

On July 9, 2020, KKR announced its agreement to acquire Paysafe Pay Later, the deferred payments division of the Paysafe Group. Paysafe Pay Later, previously known as Payolution, was established in 2011 and focuses primarily on the DACH region, which includes Germany, Austria, and Switzerland. They offer omni-channel payment solutions for both online and physical retailers, enabling them to provide white-labelled invoice and installment payment options, alongside bank transfers and direct debits. Notable clients include well-known brands such as Decathlon, Teufel, and Schuhcenter.de.

This acquisition marks KKR’s latest move into the payment sector within German-speaking markets and is anticipated to finalize in the third quarter of 2020, pending necessary regulatory approvals.

Industry Overview

The Payments industry in Germany, Austria, and Switzerland (DACH) has been experiencing rapid growth, driven by increasing consumer preferences for digital transactions and the rise of e-commerce. Local consumers are increasingly favoring payment methods that offer flexibility, such as deferred payment options, which has led to heightened competition among payment service providers to innovate and enhance their offerings.

In this environment, the demand for seamless transactions has never been greater. Companies that provide payment solutions are expected to offer integrated services that encompass both online and offline capabilities, catering to the shifting habits of consumers and merchants alike. The DACH region remains particularly vibrant, with a strong push towards cashless solutions fueled by both consumer behavior and regulatory frameworks.

Additionally, the COVID-19 pandemic has significantly accelerated the adoption of digital payment methods, as more consumers transitioned to online shopping. This shift is likely to have long-lasting implications for the payments landscape, emphasizing the necessity for payment service providers to adapt and develop innovative solutions tailored to the evolving needs of businesses and consumers.

Rationale Behind the Deal

The acquisition of Paysafe Pay Later by KKR aligns with their strategy to strengthen their portfolio within the thriving payment services sector, particularly focused on the DACH region. By incorporating Paysafe Pay Later’s payment solutions and established client base, KKR aims to capitalize on the growing trend of deferred payments and enhance their offerings to merchants.

Furthermore, this transaction underscores KKR's commitment to investing in companies that not only have strong market positions but also possess the potential for significant growth. Paysafe Pay Later’s technological capabilities and customer-centric solutions present a compelling opportunity to leverage advancements in the payments ecosystem.

Investor Information

KKR is a leading global investment firm known for its focus on private equity, energy, infrastructure, real estate, and credit markets. The firm seeks to identify and invest in high-quality companies that exhibit the potential for value creation and growth. With a portfolio that spans various sectors, KKR has a deep understanding of the payments landscape and is committed to transforming companies through operational improvements and strategic alliances.

With extensive experience and a proven track record, KKR is well-positioned to support Paysafe Pay Later’s further development and expansion, making it a fitting stewardship for the company as it navigates ongoing growth opportunities in the payment services market.

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The acquisition of Paysafe Pay Later by KKR is likely a significant move within the payments sector, given the strategic importance of this segment in current and future market dynamics. KKR’s expertise provides assurances that the company will benefit from enhanced operational efficiencies and access to more extensive resources, facilitating growth and innovation.

This deal could prove beneficial as it positions Paysafe Pay Later to expand its reach and develop new products while meeting the changing demands of consumers. The emphasis on white-label offerings can further enable retailers to create customized experiences for their customers, adding value to their service propositions.

However, the success of this investment will largely depend on effective integration and execution post-acquisition. If KKR can leverage its scale and capabilities to optimally position Paysafe Pay Later in the rapidly evolving payments landscape, it could result in a robust return on investment. Overall, this appears to be a promising acquisition, provided that strategic synergies are effectively harnessed.

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