Thursday , February 27, 2020

Repay Expands Its Footprint with Ventanex Acquisition

Payment-services provider Repay Holdings Corp. continued its run of acquisitions Monday when it announced it bought Ventanex for up to $50 million. Ventanex is an integrated-payments provider operating in consumer finance, especially mortgage-loan servicing, business-to-business health-care payments, and some other segments.

Founded in 2012 and based in the Dallas suburb of The Colony, Texas, Ventanex enables its clients to send and receive funds across such payment types as automated clearing house, debit and credit card, virtual card, checks, and others. 

“The acquisition of Ventanex advances Repay’s overarching strategy of being the preferred payments provider to high-growth verticals where our technology and payment capabilities serve as differentiators,” John Morris, chief executive of Atlanta-based Repay, said in a statement. “The consumer-finance and B2B health-care markets will provide significant growth opportunities, as these verticals are in the early stages of a secular shift from legacy payment mediums to the more innovative and varied payment solutions in which we specialize. Additionally, Ventanex’s consumer-finance and B2B focus aligns well with our existing client base, allowing us to provide both customer sets with more robust offerings.”

Sanjay Sakhrani, an analyst who follows the payments industry at New York City-based Keefe Bruyette & Woods Inc., said in a report that “the acquisition will allow Repay to grow its footprint in the consumer-finance vertical and enter the [business-to-business] health-care vertical market, which will be a significant opportunity as the market for outbound health-care payments is estimated to be $170 billion. Additionally, Ventanex’s mortgage-loan servicer is expected to expand the company’s addressable market by about $500 billion.” 

Moreover, “Repay and Ventanex’s client bases of largely companies that service loans have significant overlap which should enable them to cross-sell products and services,” Sakhrani wrote.

Another analyst, Robert Napoli of Chicago-based William Blair & Co., issued a report saying “the consumer-mortgage vertical is a nice extension of Repay’s auto, personal-loan, and consumer-debt verticals, and the B2B health-care vertical expands its capabilities in B2B payments, particularly on the accounts-payable side.”

In October Repay acquired APS Payments, which Napoli said focuses on the accounts-receivable side of B2B payments.

Repay said it paid $36 million at closing, with Ventanex’s former owners potentially earning up to $14 million more if they meet performance targets. Ventanex generated about $12 million in revenues last year. Repay financed the deal with cash on hand and borrowings under its existing credit facility.

In addition to Ventanex and APS Payments, another recent Repay acquisition is TriSource Solutions. TriSource provides back-end transaction-processing services to independent sales organizations and had been Repay’s primary third-party processor for back-end settlement since 2012.

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