By Manya Saini and Hannah Lang

(Reuters) -Private equity firm KKR has agreed to purchase a substantial portion, or up to 40 billion euros ($43.71 billion), of payments company PayPal’s buy now, pay later (BNPL) loans in Europe, the companies said on Tuesday.

Even though BNPL remains popular after the pandemic-led surge in its use among millennials and Gen Z customers, the sector’s fortunes turned last year as rising interest rates and red-hot inflation dampened the purchasing power of consumers.

PayPal shares were last up 1.7% following the news of the deal, which is expected to generate about $1.8 billion in gross proceeds and close in the second half the year.

The company said its growth forecast for adjusted profit, made in May, of about 20% on a per share basis, which was above Wall Street estimates, already included the deal.

After the deal closes, PayPal expects to allocate roughly $1 billion to incremental share repurchases in 2023, contributing to an updated outlook of about $5 billion in total share repurchases so far this year.

“Strategically, we like this move, as we view offloading credit risk as a positive for payment processors,” Brett Horn, a senior equity analyst with Morningstar Research Services, said in a note.

“Additionally, given the still nascent nature of BNPL offerings and the uncertainty around future performance of BNPL offerings, we think this deal removes an element of risk for PayPal,” Horn added.

The companies said private credit funds and accounts managed by KKR will purchase up to 40 billion euros loan receivables originated by PayPal in France, Germany, Italy, Spain and the United Kingdom.

PayPal last year processed more than $20 billion of BNPL payment volume globally, up nearly 160% from 2021. Since launching its BNPL service in 2020, PayPal has issued more than 200 million loans to more than 30 million customers globally.

The company said it will continue to remain responsible for all customer-facing activities, including underwriting and servicing associated with its European BNPL products.

($1 = 0.9151 euros)

(Reporting by Manya Saini in Bengaluru and Hannah Lang in Washington; Editing by Arun Koyyur and Will Dunham)

By Joanna Plucinska and Valerie Insinna

PARIS (Reuters) – India dominated the Paris Airshow for a second day on Tuesday, as Air India finalised a huge order for 470 planes from Airbus and Boeing.

The agreement, when sketched out in February, was the largest ever plane deal by number of aircraft. But it was surpassed on day one of the Paris show by Indian rival IndiGo’s order for 500 Airbus narrowbody jets.

Finalising the deal puts it in the aerospace industry’s order backlogs as firm orders. Until now, it was only a preliminary deal. Air India said it was worth $70 billion at list prices, though airlines typically get discounts on big orders worth at least half the headline price, analysts say.

Efforts by Indian airlines to keep pace with the world’s fastest-growing aviation market, serving the largest population, have sent industry records tumbling even though manufacturers are struggling to meet output goals due to supply chain snags.

But some analysts have expressed concern that airlines could be over-ordering jets in pursuit of the same passengers.

Air India’s deal includes 250 planes from Airbus and 220 from Boeing. The Airbus part comprises 210 A320neo and A321neo narrowbody jets and 40 A350 widebodies. Boeing’s deal is for 190 narrowbody 737 MAXs, plus 20 787 Dreamliner and 10 777X widebodies.

“Our ambitious fleet renewal and expansion programme will see Air India operate the most advanced and fuel-efficient aircraft across our route network within five years,” Air India Chief Executive Campbell Wilson said in a statement.

The buying spree by Indian airlines adds to signs of strong global demand for civilian aircraft as travel rebounds from the pandemic and airlines look to reduce their environmental impact with more fuel-efficient new models.

Demand has been hottest for short and medium-haul narrowbody jets, but engine maker Rolls-Royce said on Tuesday the market for long-haul widebodies was also coming back strongly.

However, planemakers and their suppliers remain concerned about their ability to meet bulging order books amid rising costs, parts shortages and a scarcity of skilled workers.

Lars Wagner, CEO of MTU Aero Engines, said on Tuesday labour shortages and problems with the production of castings were the biggest strains in the engine supply chain.

INDIAN RIVALRY

Air India, with its maharajah mascot, was once known for its lavishly decorated planes and stellar service, but its reputation declined in the mid-2000s as financial troubles mounted.

Its renaissance under the Tata conglomerate aims to capitalise on India’s growing base of fliers and large diaspora, currently mostly served by foreign rivals such as Emirates.

The mega-order will also put Air India on a stronger footing to compete with budget rival IndiGo, which has a majority share of the Indian market and a strong position in regional flights.

Elsewhere at the show on Tuesday, Ethiopian Airlines said it expected to announce an order for about 130 Airbus and Boeing planes shortly after the event.

Leasing company Avolon finalised an order for 40 Boeing 737 MAX 8 planes, while Philippine Airlines firmed up an order for nine Airbus A350-1000 widebody jets and Qantas finalised a deal for nine Airbus A220-300s, confirming a Reuters report.

(Reporting by Tim Hepher, Joanna Plucinska, Allison Lampert, Valerie Insinna and Aditi Shah; Editing by Mark Potter)

By Baranjot Kaur and Akanksha Khushi

(Reuters) -Binance, the world’s biggest cryptocurrency exchange, and Binance.US have entered into an agreement with the U.S. Securities and Exchange Commission to ensure that U.S. customer assets remain in the United States until a sweeping lawsuit filed this month by the regulatory agency is resolved.

The agreement, disclosed in court papers filed late on Friday, still requires the approval of the federal judge overseeing the litigation. To make certain that U.S. customer assets do not go offshore, the agreement allows only Binance.US employees access to these assets.

The SEC on June 5 sued Binance, its CEO and founder Changpeng Zhao and Binance.US’s operator, alleging that Binance artificially inflated its trading volumes, diverted customer funds, failed to restrict U.S. customers from its platform and misled investors about its market surveillance controls.

The suit and one filed by the SEC the following day against major U.S. exchange Coinbase represented a dramatic escalation of a crackdown on the industry by U.S. regulators.

Under the agreement, which does not resolve the SEC lawsuit, Binance.US will take steps to make sure that no Binance Holdings officials have access to private keys for its various wallets, hardware wallets or root access to Binance.US’s Amazon Web Services tools, the court filings showed.

The SEC said in a statement released on Saturday that the emergency relief order secured for Binance.US customers will protect their assets and ensure that they can continue to withdraw those assets.

“Given that Changpeng Zhao and Binance have control of the platforms’ customers’ assets and have been able to commingle customer assets or divert customer assets as they please … these prohibitions are essential to protecting investor assets,” Gurbir Grewal, director of the SEC’s enforcement division, said in the statement.

A Binance spokesperson said in a statement on Saturday: “Although we maintain that the SEC’s request for emergency relief was entirely unwarranted, we are pleased that the disagreement over this request was resolved on mutually acceptable terms. User funds have been and always will be safe and secure on all Binance-affiliated platforms.”

Under other provisions in the proposed agreement, Binance.US will create new crypto wallets to which the global exchange’s employees have no access, provide additional information to the SEC and agree to an expedited discovery schedule, the filings said.

The U.S. affiliate of Binance halted dollar deposits last week and gave customers a deadline of June 13 to withdraw their dollar funds, after SEC asked a court to freeze its assets.

(Reporting by Baranjot Kaur and Akanksha Khushi in Bengaluru; Additional reporting by Jose Joseph; Editing by Will Dunham, Stephen Coates and Louise Heavens)

By Hyunsu Yim and Heekyong Yang

SEOUL (Reuters) -Hyundai Motor will raise average annual investment in electrification by nearly two-thirds, spending $28 billion in the next decade, and further restructure its struggling China business as part of a strategy to boost electric vehicle (EV) sales.

In its annual investor day on Tuesday, the South Korean automaker, the world’s No. 3 auto group by sales together with its affiliate Kia, said it also raised its EV sales target to 2 million units by 2030 from 1.87 million.

It would represent around one third of its total vehicle sales, up from 8% expected this year.

“With global EV demand growing faster than market forecasts, Hyundai Motor is raising its 2030 sales target,” it said in a statement.

To meet the target, Hyundai plans to boost local production of EVs in its three key markets – the United States, Europe and South Korea – as more countries roll out incentives for locally manufactured vehicles.

In the United States, its biggest market, EV production will account for three-quarters of its total vehicle production there by 2030 from just 0.7% now.

Hyundai Motor CEO Jaehoon Chang said the automaker will consider making its vehicles more readily compatible with the charging standard Tesla is pushing in North America.

While it raised EV sales targets in its major markets, Hyundai said it would further restructure its struggling China business to focus on profitability.

Chang told investors that China, the world’s largest vehicle market, had been very profitable up until 2016 but was now the biggest risk as the automaker had lost share to domestic rivals.

Hyundai sold one China plant in 2021 and plans to sell two more, including one that it shut down last year and another that it plans to close this year. The remaining two plants will be further rationalised and used for exports to emerging markets.

Its product line-up in China will also be reduced to eight from 13, focusing on high-end and SUV models including the Genesis luxury brand.

To enhance its competitiveness in batteries and develop next-generation batteries, Hyundai plans to invest 9.5 trillion won ($7.4 billion) over the next 10 years.

Hyundai said it plans to introduce competitive lithium-iron-phosphate (LFP) batteries, a cheaper alternative to lithium ion batteries that have spurred EV adoption in China, for the first time around 2025.

Its bigger rival Toyota also announced last week a plan to start using LFP batteries.

Hyundai aims to source more than 70% of batteries through joint ventures by 2028 and beyond. Other plans include collaboration with specialised companies and startups, as well as establishing joint ventures with battery companies to ensure stable supply.

“Joint research and equity investment in startups to accelerate the development of next-generation batteries is also under way,” the company said.

Hyundai said it aimed to achieve an operating profit margin of 10% or higher in the EV business by 2030.

Its investment of 35.8 trillion won ($28 billion) in electrification is part of a 109.4 trillion won budget Hyundai plans to spend through to 2032.

($1 = 1,285.2400 won)

(Reporting by Hyunsu Yim and Heekyong Yang; Writing by Miyoung Kim; Editing by Ed Davies, Jacqueline Wong and Conor Humphries)

(Repeats fixing typo in last quote)

By Libby George

LONDON (Reuters) – Cautious optimism in the developing world that wealthier countries and China had finally fixed the tortuous process of sovereign debt restructurings is fizzling again.

Debt crisis veterans gave a weary thumbs up in April to plans to galvanize the G20-led “Common Framework” – a platform supposed to speed up and simplify the process of getting overstretched countries back on their feet.

Though Zambia, locked in default for almost three years, does look to be making some progress, many of the thorny issues that have drawn criticism of the Common Framework remain.

One is how China, now the largest bilateral lender to the developing world, swallows losses. Another is how much debt poorer countries can carry given ultra-low global interest rates are a thing of the past.

The result is that countries trying to restructure their problematic debt have been left to negotiate bespoke arrangements in much the same way they did in the past.

“There was optimism that a deal could be clinched relatively quickly,” said Cornell University professor and former head of the IMF’s China Division Eswar Prasad, referring to the April reboot of the Common Framework. “That optimism proved unwarranted.”

Even news that Zambia’s public creditors are prepared to make a debt restructuring proposal, after the country had resorted to public pleas for urgency, was “unlikely by itself to signal a breakthrough in negotiations on the broader framework for debt restructuring,” Prasad said.

G20 nations launched the ‘Common Framework’ in 2020, when the COVID pandemic upended nations’ finances. Nearly three years later, with Zambia, Chad, Ethiopia and Ghana all in the set-up, it is yet to chalk up a solid success.

The core struggle has been how much debt countries need to write off, and coaxing China, after a decade-long lending spree, into debt talks that it views as designed by western powers.

The April attempt to reform the Framework saw the IMF promise to share more information earlier, particularly regarding debt sustainability, and to give struggling countries more concessional finance.

In exchange, the hope was that China would back down from demands that multilateral lenders relax their “preferred creditor status” and take loan losses.

Others said it was far from clear that China had abandoned some of its tough requests, including that multilateral development banks take loan losses.

Neither the People’s Bank of China nor China’s Finance Ministry immediately responded to requests for comment. In April, China said it was willing to work with all parties on the Common Framework but it has not commented publicly on the issue since then.

“There was a bit of misreporting about a breakthrough,” said Kevin Gallagher, director of the Boston University Global Development Policy Center, adding there are also questions about how much concessional lending multilateral development banks can give.

In a note earlier this month, analysts at JPMorgan said that despite “incremental changes” to the Common Framework, the core tensions remained, making debtor countries subject to it more reluctant to “preemptively pull the trigger” on restructuring.

They estimate that the government bonds of 21 countries, with a combined value of $240 billion, are now at “distressed” prices.

CREDITOR CLASHES

Bringing China into the fold of the traditional Western-led “Paris Club” of creditor nations, and the “London Club” of private creditors like pension and hedge funds, has prompted enormous challenges.

That high-profile friction has seen even U.S. Treasury Secretary Janet Yellen publicly accuse China of being a roadblock to deals.

This has amplified fiscal pain for countries like Zambia, which has been in default since 2020.

“I think they are all slightly fed up as they feel they’re getting trampled on — caught between a broader battle,” said Thys Louw, portfolio manager for emerging markets with Ninety One.

Beijing issued some $138 billion in new loans between 2010 and 2021, according to the World Bank, making its sign-off essential as a condition to unlock IMF funds. Zambia owes China some $5.9 billion, roughly 23% of its GDP and close to half of the $12.8 billion of the external debt it is trying to restructure.

Zambia even asked French President Emmanuel Macron to use his clout to help.

‘TANGIBLE’ PROGRESS

The IMF, World Bank and the G20 created the Global Sovereign Debt Roundtable (GSDR) early this year to fix the Framework and speed debt restructurings.

The IMF said this month it expects “tangible” progress during June GSDR meetings.

Louw said Ghana’s relatively speedy IMF staff-level agreement, and Zambia’s forward momentum were positive signs.

“I do think we’re much closer now to understanding what’s required from everyone in the room,” Louw said.

But until a widely accepted framework is in place, indebted nations are stuck in uncharted waters, slogging through each piece of their debt deals individually. And observers note that Ghana still faces the bigger hurdle of getting creditors to agree on new terms.

“Very often people involved in these discussions let their optimism get ahead of the facts…and then once it comes down to brass tacks, when people look at who’s going to take how much of a haircut, things start falling apart,” Prasad said.

“I think it’s just going to be a grinding negotiation.”

(Additional reporting by Joe Cash in Beijing. Editing by Marc Jones and Christina Fincher)

By Xinghui Kok

SINGAPORE (Reuters) – Singapore-based Grab Holdings, Southeast Asia’s leading ride-hailing and food delivery app, is cutting 1,000 jobs or 11% of its workforce, its CEO said on Tuesday, citing the need to manage costs and ensure more affordable services long term.

In a letter sent to employees late on Tuesday and seen by Reuters, chief executive Anthony Tan said the cuts, the biggest since the start of the pandemic, were not “a shortcut to profitability” but a strategic reorganisation to adapt to the business environment.

“Change has never been this fast. Technology such as generative AI (artificial intelligence) is evolving at breakneck speed. The cost of capital has gone up, directly impacting the competitive landscape,” Tan said in the letter.

“We must combine our scale with nimble execution and cost leadership, so that we can sustainably offer even more affordable services and deepen our penetration of the masses.”

Tan said that even without layoffs, Grab had managed costs and should hit its target for group adjusted EBITDA breakeven this year.

The “superapp”, founded in 2012, offers deliveries, rides and financial services in eight Southeast Asian countries, including Indonesia, Malaysia, the Philippines, Singapore, Thailand, and Vietnam.

Its shares were up 4.7% premarket after Tan’s announcement to staff. The stock had climbed as much as 5.6% premarket, extending earlier gains on a Bloomberg News report of the cuts.

The layoffs follow a similar move last year by Indonesian tech firm GoTo, which offers rides, e-commerce and financial services. It has undergone strict cost-cutting, including axing 12% of its workforce in 2022. It laid off a further 600 staff in March.

Its incoming CEO is planning to head the firm only temporarily and quit after improving profitability, sources told Reuters last week.

In May, Grab reported a quarterly loss of $250 million but said revenue in the first quarter of this year rose 130.3% to $525 million from a year ago.

In February, it issued an upbeat forecast for full-year revenue for 2023 and brought forward its profitability timeline.

The U.S.-listed Grab’s last job cuts were in 2020, when 360 people were laid off in response to the impact of the pandemic. The company had 11,934 staff as of the end of 2022, including about 2,000 from its acquisition of a grocery chain last year, its latest annual report said.

In September last year, it said it had no plans to undertake mass layoffs despite the weak market. In December, Tan told staff the company was freezing most hiring, payrises for senior managers, and cutting travel and expense budgets.

(Additional reporting by Lavanya Ahire in Bengaluru and Chen Lin in Singapore; Editing by Martin Petty and Barbara Lewis)