PayPal has sold its UK virtual credit card portfolio to Deutsche Bank, according to 9fin sources, following an auction process which attracted attention from several major investment firms including KKR, Apollo, Blue Owl and Sixth Street.

The US-based payments giant has been pursuing a balance-sheet optimisation strategy, selling off portions of its financing business to asset-based finance funds.

This began with Project Danube in 2023, which saw its European and UK buy-now-pay-later origination sold to KKR, after an auction process in which Elliott Management was the underbidder.

KKR has subsequently used the transaction as a case study for its asset-based finance business, and the deal has been extended and amended several times since.

PayPal marketed its US BNPL book this year, announcing in September that Blue Owl would buy $7bn of its “pay in four” loans over the next two years.

The company reported its third quarter numbers last week, but did not mention its UK sale process, or break out the size of the UK revolving credit portfolio.

It did say that the UK book had grown by $160m-equivalent in the year to September 2025. One fund manager with knowledge of the process said the deal as originally offered had been roughly £500m.

PayPal does not offer physical credit cards, but offers a virtual credit card-like revolving unsecured debt facility to UK customers via the PayPal Credit brand.

The auction process was unusual, according to several sources, as PayPal asked prospective bidders to submit their advice on how to structure a deal to receive deconsolidation treatment.

PayPal did not retain an external advisor for the sale, according to 9fin sources. Morgan Stanley, which worked on Danube, advised underbidder Apollo on the process.

Credit card exposures can be difficult to fully deconsolidate from an originator, since they are revolving exposures which can be flexibly drawn and repaid.

Term debt instruments, even short-term unsecured exposures like BNPL, are easier to deconsolidate since they have a defined term and cannot be redrawn.

Some funds also find it harder to purchase credit card pools from active originators, since this can require a long-term commitment to fund drawdowns.

Deutsche Bank is said to be looking at take-out options including a public securitisation, though this would likely not be until mid-2026. Any such deal would be highly complex, since the variable balances of credit cards require structural cushioning such as variable funding notes.

Credit card collateral is primarily financed in master trust format, since this allows structural flexibility to be built into the transaction, but these vehicles are more complex to set up than standalone issues.

PayPal, Deutsche Bank, KKR, Sixth Street and Blue Owl did not respond to requests for comment. Apollo and Morgan Stanley declined to comment.