By David French and Svea Herbst-Bayliss
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NEW YORK - Impactive Capital continues to engage with WEX Inc to bolster the payments company's fortunes, including using depressed valuations across the financial technology space to make beneficial acquisitions, the activist's managing partner said on Tuesday.
The firm has been a shareholder since early 2021 of Portland, Maine-based WEX, which provides payments solutions and virtual cards to businesses including travel, fleet and healthcare.
The company continues to recover from being significantly impacted by restrictions on travel caused by the COVID-19 pandemic, but despite improvements still trades at a discount to how its individual business units would be valued, Lauren Taylor Wolfe told the annual 13D Monitor Active-Passive Investor Summit in New York.
As well as using buybacks to increase its share price, WEX's ability to generate strong levels of free cash flow would give it the ammunition to acquire fintechs which have seen their valuations suffer this year from investors shifting away from high-growth companies with limited profitability.
"Private and public company market valuations have come back down to earth and many payments companies are in desperate need of cash," Taylor Wolfe said.
"We expect companies like WEX to be able to pounce on compelling acquisition opportunities in the coming years."
Taylor Wolfe founded the firm along with Christian Asmar after having spent years at hedge fund Blue Harbour Group before setting up their own firm in 2019. With a $250 million investment from the California State Teachers Retirement System, the firm is focused on how investing for social good can help fuel returns.