FLEETCOR Looks To Invest $1B Despite Pandemic M&A Slowdown

FLEETCOR is looking to invest $1 billion this year, despite an M&A slowdown in the payments sector due to the ongoing pandemic.

In a recent interview with Barron’s, FLEETCOR EVP of Corporate Development and Strategy Steve Greene said the company is always on the hunt for deals, but that merger activity has slowed significantly since March. In particular, FLEETCOR is looking for companies to strengthen its position in the fuel, tolls, lodging, and payables spaces, and for companies operating in new regions.

Greene said the merger slowdown is due largely to potential sellers being unable to convince buyers to pay “top dollar” during the ongoing pandemic recession.

“People don’t want to sell for 20% or less,” Greene told Barron’s. “People want to wait until the recovery happens.”

He added that “higher quality” companies are likely to tap the equity markets. He noted that Bill.com, which received an investment from FLEETCOR in April 2019, held a successful initial public offering (IPO) in December.

Greene said COVID-19 is also pushing companies to migrate their B2B payments to cloud-based systems. Prior to the pandemic, many companies still relied on in-person sales and paper-based payments, but that all of this has changed since the outbreak.

“B2B payments migration to the cloud has been a long-time coming, but Covid-19 – and the immediate need to go virtual — has accelerated the pace of innovation for corporations,” Greene told Barron’s. “The back office is no longer something that can sit on the back burner. Companies are realizing the necessity of digital payments and the long-term business benefit.”

FLEETCOR is also looking at areas “adjacent” to payments, Greene said, such as technologies that can help customers figure out how much to pay suppliers or check to make sure invoices get approved.

“Having software and tools that they can use remotely to keep their businesses running is very important,” Greene told the publication.

Barron’s noted that payments still remains a core interest of FLEETCOR, with the company agreeing in September to buy cross-border payments provider Associated Foreign Exchange (AFEX) for up to $500 million. The deal is expected to close in the first quarter 2021.

Greene told Barron’s that while FLEETCOR would consider deals in the $2 billion to $5 billion range, it was not considering anything valued at over $10 billion.

Earlier this year, Kevin Phalen, Visa’s head of global business solutions, discussed the fundamental changes taking place in the B2B payments landscape as businesses embrace digital over paper transactions amid the ongoing COVID-19 pandemic.

“Fundamental changes to the B2B payments landscape are taking place today, faster than ever before, helping the ecosystem eliminate inefficient B2B payments processes,” he said in a contribution to the PYMNTS Powering The Digital Shift eBook.

Access to capital hasn’t been this tight since the market meltdown of 2008, so motivated players are finding better, faster ways of moving B2B funds especially. “Today, visibility and speed of paying suppliers — and getting paid — are critical for businesses,” Phalen said. “To meet this need, the payments ecosystem is pivoting away from entrenched manual and paper-based processes. The stage was set for that pivot over the past few years. The trend of consumerization of B2B payments has familiarized individuals with the ease of making payments quickly and across a variety of form factors.”