Mastercard Foundation Makes Private Equity Debut With $550 Million Deal

The Mastercard Foundation has reportedly established itself as a major institutional investor following a private equity deal.

As Bloomberg News reported Tuesday (Nov. 26), the foundation has for years been one of the most successful investors in the world based on the strength of its sole holding: Mastercard.

But the foundation is now trimming that $50 billion stake, diversifying into various assets and — more recently — purchasing discounted private equity stakes.

For example, the report said, Mastercard Foundation Asset Management (MFAM) has purchased private equity ownership interests and other illiquid assets from the board of Eastman Kodak’s pension plan — valued at $764.4 for $550.6 million. That sale is expected to become final at the end of the year.

MFAM is Mastercard’s largest shareholder, owning a 10% stake in the company. Bloomberg says the group aims to diversify the portfolio over the next seven years, selling off 13% to 15% of Mastercard stock each year.

The shares, given to the foundation when Mastercard went public in 2006, have risen more than 13,000% over the years, making it one of the top performers on the S&P 500, the report adds.

In other Mastercard news, PYMNTS spoke earlier this month with Sumeet Bhatt, the company’s senior vice president for payments optimization, about how merchants can avoid credit declines from things like expired cards and lot accounts.

“It’s what we call credential lifecycle management,” Bhatt told PYMNTS.

In an era when consumers insist on frictionless digital payment experiences, optimizing payment flows has become crucial for merchants.

Bhatt noted that a substantial share of consumers — more than 70% — store credentials on merchant sites, expecting uninterrupted transactions.

“It’s extremely important that these credentials are updated to provide the best user experience to the cardholders,” he said.

However, outdated payment credentials lead to declined transactions far too often, leaving customers frustrated and looking for different merchants.

Bhatt illustrated this with the example of a streaming service subscription getting interrupted when a card on file wasn’t updated. These disruptions can bring about frustration for the customer and a potential lost sale for the merchant.

“To meet the moment, savvy merchants are doubling down on secure, up-to-date payment solutions to retain their edge, and their shoppers,” PYMNTS wrote. “The ultimate goal? Fewer declines and more conversions.”