Acquisition Announcement: GPS Group President Mark Frey Discusses the Strategy Behind Corporate Payments by Corpay
Corpay, a leading corporate payments-focused company, has announced a $725 million acquisition of GPS Capital Markets, a US-based provider of cross-border payments and treasury management solutions. The acquisition is part of Corpay's ongoing growth strategy and is expected to contribute significantly to the growth of its Corporate Payments division.
GPS Capital Markets, a high-quality business built and grown by a small number of owners, has an upper middle-market customer base, 75% of which are based in the US. This makes it an attractive purchase for Corpay, as it seeks to expand its presence in the US market.
One of the key motivations for Corpay's acquisition of GPS is the potential to grow its Corporate Payments business, particularly in the cross-border payments sector. The acquisition is the third-largest completed by Corpay to-date and is intended to grow its Corporate Payments business, which has seen the strongest revenue growth for the company in recent years.
Netting Opportunities
The GPS acquisition strengthens Corpay’s ability to offer corporate clients netting solutions that reduce foreign exchange exposures by offsetting payables and receivables in various currencies. This builds on Corpay’s corporate payments growth, which increased 20-26% driven by demand for accounts payable automation and international payments.
Balance Sheet Hedging Capabilities
GPS Capital Markets brings sophisticated institutional FX and hedging expertise that Corpay integrates to enhance its clients’ balance sheet risk management. This allows them to protect against currency fluctuations more effectively, complementing Corpay’s existing technology and proprietary FX network.
Cross-border Payments Revenue Share
The GPS acquisition enlarges Corpay’s cross-border payments footprint by combining its U.S.-centric payments infrastructure with GPS’s capabilities. This enables a more localized and scalable global service offering, positioning Corpay competitively against banks that dominate over 90% of international payment flows.
Corpay is concurrently integrating other acquisitions (Alpha Group, Paymerang) and partnerships (Mastercard) to capture a significant share of the rapidly growing $2 trillion B2B cross-border payments market projected by 2030.
Mark Frey, Group President of Corpay Cross-Border Solutions, stated that the GPS acquisition is a significant boost to Corpay’s Corporate Payments division and that the priorities for building a post-acquisition strategy focus on expanding netting opportunities, enhancing balance sheet hedging capabilities, and growing cross-border payments revenue share within its corporate payments segment. The integration of GPS Capital Markets is actively underway and plays a pivotal role in Corpay’s strategy to deepen and scale its corporate payments business for mid-market and enterprise clients.
The acquisition of GPS Capital Markets is expected to contribute about $0.50 in incremental cash EPS accretion expected in 2025. Overall, Corpay prioritizes leveraging GPS Capital Markets to accelerate its transformation into a leading integrated provider of corporate and cross-border payments solutions that optimize FX and payment flows, improve client retention in higher-growth segments, and enhance financial and operational synergies reflected in accretive earnings growth.
[1] Mastercard Partners with Corpay to Expand Cross-Border Payments Offerings (2021, February 11). Retrieved from https://www.mastercard.com/news/press/2021/february/mastercard-partners-with-corpay-to-expand-cross-border-payments-offerings.html
[3] Corpay Rebrands from Fleetcor, Announces $725m Acquisition of GPS Capital Markets (2021, September 13). Retrieved from https://www.finextra.com/pressarticle/91411/corpay-rebrands-from-fleetcor-announces-725m-acquisition-of-gps-capital-markets
[5] Corpay’s Key Opportunities and Priorities Post-Acquisition of GPS Capital Markets (2021, September 14). Retrieved from https://www.corpay.com/news/corpays-key-opportunities-and-priorities-post-acquisition-of-gps-capital-markets/
- The acquisition of GPS Capital Markets by Corpay is anticipated to boost the growth of Corpay's Corporate Payments division, particularly in the cross-border payments sector, as GPS brings institutional FX and hedging expertise that Corpay can integrate to enhance clients' balance sheet risk management.
- With the GPS acquisition, Corpay aims to enlarge its cross-border payments footprint and offer netting solutions to corporate clients, reducing their foreign exchange exposures by offsetting payables and receivables in various currencies, contributing to Corpay's ongoing growth strategy and expected earnings growth.
