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Bids for FTV’s VPAY come in below expectations

One of the hottest deals in payments has hit the pause button.

VPAY, the healthcare payments company backed by FTV Capital, is off the market, six sources said. Bids didn’t come in near what VPAY was seeking, sources said.

The Plano, Texas, company went up for sale earlier this year, drawing interest from strategics and private equity firms, people said. VPAY had sought offers north of $700 million, Buyouts reported in April. Proposals, however, came in around $500 million, one of the sources said. Raymond James advised on the process, Buyouts said.

VPAY has decided “not to sell,” one of the sources said.

VPAY, a prepaid card issuer, facilitates billions of dollars in payments on behalf of health plans, dental plans, third-party administrators and workers’ compensation and auto insurers. The company serves more than 900,000 medical providers, auto-repair shops, policyholders, claimants and members. VPAY produces Ebitda of roughly $25 million to $30 million, Buyouts said.

FTV’s investment in VPAY dates to February 2016. The PE firm led a $76 million round for the company at that time.

News of the delayed process comes just months since Instamed sold to JP Morgan Chase & Co. That deal was valued at $550 million to $600 million, Buyouts said.

In another high-profile transaction, Parthenon Capital agreed to merge two portfolio companies, Zelis Healthcare and RedCard, while bringing in Bain Capital as an investor. The deal valued the new company at approximately $5.7 billion, Buyouts reported in July.

Just because VPAY is currently off market doesn’t mean it won’t get sold, one GP said. VPAY could be “softly for sale,” the executive said. If a bidder called up the company and offered to do something, it could clinch a sale, the source said. People pointed to PayScale, a provider of compensation data, analytics and software, that ran a failed process in 2018. Francisco Partners ended up buying a majority of PayScale in April in a $325 million deal.

Raymond James declined comment. Executives for VPAY and FTV could not be reached for comment.

*Sarah Pringle contributed to this report

Action Item: For more information, contact Andy Roberts, VPAY’s CEO, by emailing him here.