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Activist hedge fund Elliott Management has built a large stake in payments automation company Bill Holdings, betting the struggling fintech could soon become the latest takeover target in the sector.
Paul Singer’s Elliott has built a stake of at least 5 per cent in Bill Holdings, whose market value stood at nearly $5.2bn as of Tuesday’s close, two people familiar with the matter said.
Elliott’s position, which makes it one of Bill Holdings’ five largest investors, will add to the pressure on it after activist investor Starboard Value went public last week with an 8.5 per cent stake in the company. Elliott’s investment predates Starboard going public with its stake, the people added.
Bill Holdings, which specialises in automating payments for small-to-medium sized companies and processes more than $300bn worth of transactions a year, surged to a market value of $34bn at its peak in 2021. But its shares are down 85 per cent from their high.
Shares in Bill Holdings jumped more than 5 per cent in after-market trading after the Financial Times reported Elliott’s stake.
Rival payments companies have become takeover targets as buyers seize on depressed valuations. Competitors Coupa and AvidXchange were taken private by Thoma Bravo and TPG in $8bn and $2.2bn deals respectively, while Melio was sold for up to $3bn earlier this year.
The company has said it is expanding its client base into larger businesses which provide more reliable cash flows and trying to boost its fees from each transaction. Analysts have also flagged that it could spend its net cash pile of more than $400mn on more buybacks.
Elliott’s exact demands for the company could not immediately be ascertained. Elliott’s private equity arm has previously built stakes in several listed tech groups, such as Nielsen, Citrix and Syneos Health, before partnering with consortiums to take them private.
Bill Holdings did not immediately respond to a request for comment. Elliott declined to comment.
Elliott’s stake in Bill Holdings comes after the Financial Times reported the activist hedge fund had built a sizeable stake in Global Payments. Companies across the sector have faced a reckoning after a downturn in transaction volumes, hurting growth.
Last week, Jeff Smith’s Starboard said it planned to nominate four directors to Bill Holdings’ board in a regulatory filing. In response to Starboard’s stake, Bill Holdings said it was “confident in our ability to drive revenue growth and profitability, and create sustained value for our customers, partners, and shareholders”, pointing to its recently announced $300mn share buyback programme.
Bill Holdings’ third-largest shareholder, with a 7.5 per cent stake, is an entity called ER Collective Holdings, which named the general counsel of Clearlake Capital on its registration document. Clearlake did not respond to requests for comment.