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Dive Brief:
- Wex, which provides payments processing and management services to companies, paid $180 million to acquire a health and benefits unit from the financial services company Ascensus, the company said in a filing Thursday with the Securities and Exchange Commission. It expects to close the deal this year.
- Portland, Maine-based company’s benefits segment has bolstered growth this year, with a 34% increase in revenue for that business in the second quarter relative to last year, according to the company’s earnings report also on Thursday.
- Separately, Wex announced yesterday in a press release that it has created a new venture arm to invest up to $100 million this year in early-stage companies focused on developing electric vehicles.
Dive Insight:
Wex, which provides its software and other services to trucking fleet companies and other employers, acquired Ascensus as it seeks to expand its business of assisting companies with their employee health and benefit administration, including related payments.
“The Company expects this acquisition to expand WEX’s current footprint in the Benefits segment, while also enhancing and expanding Affordable Care Act compliance and verification capabilities,” Wex said in the filing.
Revenue for that part of Wex’s business jumped to $159.2 million for the second quarter, over the year-earlier period, offsetting a 10% decline in revenue for its mobility segment, where a drop in fuel prices reduced income related to trucking, according to a separate Thursday earnings press release.
As for the new venture fund, Wex expects investing in those early-stage companies will not only inform its understanding of advances in electric vehicles to the benefit of its truck-related business interests, but will also give its clients in that area insights. Wex may also find opportunities for acquisitions as it seeks investments for that unit, Wex CEO Melissa Smith said in answering questions from analysts on the company’s earnings call Thursday.
The company’s venture investments “will likely be made predominantly in early-stage companies focused on the energy transition, including areas such as fleet electrification, the electric vehicle (EV) charging ecosystem, energy management and optimization, and adjacent technology,” the company said in the venture fund release.
It has already purchased minority ownership stakes in two such companies, Chargetrip and Ev.energy.
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