Addressing Key Functionality Gaps with AvidXchange Investment

Corpay’s investment in AvidXchange addresses a critical functionality gap for the payments firm, aligning with the increasing demand for accounts payable (AP) automation among smaller enterprises. AvidXchange specializes in SaaS-based AP automation and payment solutions, focusing on digitizing and streamlining AP workflows for middle-market businesses.

Deal Details and Market Impact

Private equity firm TPG will retain a majority stake in AvidXchange. Corpay is investing approximately $500 million for a 33% equity share, with the transaction valued at $2.2 billion and anticipated to close by Q4 2025, subject to shareholder and regulatory approval. The deal was already approved by AvidXchange’s board.

Market Position and Impact of Pandemic

The pandemic highlighted the need for modern financial tools among smaller firms. Many businesses seized this opportunity to transition from analog processes, driven by remote work scenarios and the inefficiencies of manual operations. AvidXchange’s position as a provider of digitized AP automation solutions enabled it to capitalize on these market changes.

Expanding Market Segments

This acquisition is part of Corpay’s strategy to expand its B2B payment and automation capabilities. In 2021, Corpay acquired Roger, a global AP software platform for small businesses, renaming it as Corpay One. A year later, the company added Accrualify, a cloud-based payment platform for mid-sized companies. With AvidXchange now on board, Corpay offers a modular corporate payments product catering to businesses of all sizes.

Fueling “Inorganic Growth”

In another move toward inorganic growth, Corpay recently sold a minority share of its stock to Mastercard. This partnership positions Corpay as the exclusive provider of currency risk management and integrated large-ticket cross-border payment solutions for Mastercard’s financial institution customers.

“This development, alongside the recent Mastercard announcement, underscores a broader desire among large providers to expand their presence across the procure-to-pay value chain,” said Hugh Thomas, Lead Analyst of Commercial and Enterprise Payments at Javelin Strategy & Research.