WEX gets $400M investment from Warburg Pincus, plus expanded credit

PHOTO / COURTESY OF WEX WEX Inc. has obtained a $400 million investment and credit adjustment to help it navigate the pandemic.

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By Staff

WEX Inc. (NYSE: WEX), a Portland-based provider of corporate payment solutions for the fleet, travel and health care industries, announced Monday it has accepted a $400 million investment from an affiliate of Warburg Pincus LLC.

If completed, the deal would give Warburg Pincus, a New York-based global private equity firm, ownership of 4.7% of WEX’s outstanding common stock, according to a news release.

The investment includes convertible notes of $310 million and $90 million in common stock through a private placement, expected to close in the next few days.

WEX also obtained an amendment to an existing credit agreement, providing the company with more financial flexibility.

Melissa Smith, WEX’s chair and CEO, said in the release. “We are pleased to further fortify our balance sheet during the current uncertain operating environment while reaffirming our relationship with Warburg Pincus, who has demonstrated their strong commitment to the future growth of WEX.

“The combination of this investment and the recent credit agreement amendment puts us in an even stronger financial position with additional financial flexibility, improved liquidity and increased cash on hand. This better positions us to remain focused on our long-term strategic initiatives to drive our future success, and capitalize on the economic recovery when market conditions improve.”

In May, WEX posted first-quarter earnings that fell below expectations.

Citing the effects of COVID-19 pandemic, the company also pulled out of two acquisitions with a combined $1.7 billion price tag, a first for WEX, and announced steps to cut costs and control capital expenditures.

The acquisitions of eNett, a Singapore-based provider of business-to-business payment solutions to the travel industry, and Melbourne, Australia-based B2B payment provider Optal were unveiled in January at a cost of $1.7 billion in cash and stock.

Shareholders of eNett and Optal initiated separate legal proceedings in the United Kingdom against WEX, seeking to move the deal forward. While the litigation is pending, WEX remains subject to certain financing obligations under the purchase agreement.

In April, WEX announced plans to trim its U.S. workforce by 2% and put another 3% on temporary furlough. For its Maine staff, that meant cutting 45 positions and putting 90 people on temporary furlough.

WEX employs about 5,000 people worldwide.

The company said the workforce cutback reflected the impact some of WEX's customers and partners were experiencing along with a decline in demand for services, which in turn affected WEX's business.

About WEX

WEX Inc. (NYSE: WEX) is a leading financial technology service provider across a wide spectrum of sectors, including fleet, travel and health care. WEX operates in more than 10 countries and in more than 20 currencies through more than 5,000 associates around the world. WEX fleet cards offer 14.9 million vehicles exceptional payment security and control; purchase volume in travel and corporate solutions grew to $39.6 billion in 2019; and the WEX Health financial technology platform helps 390,000 employers and 31.8 million consumers better manage healthcare expenses.

About Warburg Pincus

Warburg Pincus LLC is a leading global private equity firm focused on growth investing. The firm has more than $54 billion in private equity assets under management. The firm’s active portfolio of more than 185 companies is highly diversified by stage, sector, and geography. Warburg Pincus is an experienced partner to management teams seeking to build durable companies with sustainable value. Founded in 1966, Warburg Pincus has raised 19 private equity funds, which have invested more than $83 billion in over 895 companies in more than 40 countries. The firm is headquartered in New York with offices in Amsterdam, Beijing, Berlin, Hong Kong, Houston, London, Luxembourg, Mumbai, Mauritius, San Francisco, São Paulo, Shanghai, and Singapore.