Payworks takes on outside investment

A leading United Kingdom software and service investor has purchased a stake in Winnipeg-based workforce management company Payworks Inc.

Payworks announced its partnership with private equity firm Hg Capital on Monday. Terms of the deal were not disclosed. The partnership marks the first time in Payworks’ history the company has sought outside investment.

“We’d been bootstrapped for the last 25 years and happily doing so, but we felt the vision and values that Hg brought matched and aligned with Payworks’ current operating values,” said company president Michael Penman. “(It) seemed like a good fit to accelerate our continued growth in Canada.”

Payworks manages cloud-based services like payroll and human resources for about 45,000 customers and processes paycheques for their 950,000 employees. The majority of customers are small businesses.

The company’s annual revenue is more than $100 million. (Penman declined to give an exact amount on Monday.)

Payworks has 650 staff working in multiple offices in Canada, including roughly 400 people in Winnipeg. Its headquarters is in the city’s South Pointe neighbourhood.

The investment will help Payworks create new payroll and human resources products, and continue to deliver an elevated client experience, Penman said.

“The partnership’s really a strategic step to accelerate Payworks’ growth and innovation,” he said, adding Hg’s expertise will allow the company “to develop new products faster and expand our reach in the Canadian marketplace.”

Headquartered in London with a network of offices across Europe and North America, Hg has approximately US$100 billion in assets under management.

According to a company spokesperson, Hg’s portfolio spans more than 50 companies worth US$180 billion in aggregate enterprise value, employing more than 125,000 people and consistently growing revenues at more than 20 per cent annually.

“We’d been bootstrapped for the last 25 years and happily doing so, but we felt the vision and values that Hg brought matched and aligned with Payworks’ current operating values.”

Hg invests in multiple payroll and HR software businesses, and discovered Payworks while researching the Canadian marketplace, said director Alexander Johnson. That research included surveying more than 600 payroll and HR customers in Canada.

“That’s what really got us excited: Payworks has the product with the highest customer satisfaction, which is really what we love to see because we’re looking to grow businesses,” Johnson said.

Barb Gamey, John Loewen and Dave Johnston founded Payworks in 2000. Gamey is involved with the company’s day-to-day operations, while the two men are board members. Gamey was not available for an interview on Monday, but expressed her enthusiasm for the deal with Hg.

“The Payworks ownership group is excited to welcome Hg to our partnership,” she said in a news release. “Their investment enables us to accelerate our innovation and value creation agenda, positioning Payworks for sustained leadership and diversification in the Canadian market.”

Johnson said Hg is excited to see what the future holds for Payworks because there are “such substantial growth opportunities within its existing core markets.” He added his firm sees a “classic David versus Goliath” story unfolding with Payworks competing against American giants like Dayforce, Inc. and Automated Data Processing, Inc.

Penman noted Payworks’ ongoing commitment to Winnipeg and Canada more broadly, noting the company donated more than $2 million to more than 250 charitable organizations across the country last year.

Payworks employees spent 2,200 hours volunteering in the community on company time in 2024, a number they are on track to surpass this year.

Hg fully supports Payworks keeping its headquarters in Winnipeg and continuing its charitable efforts in the community, Johnson said.

“A large part of the value of the business is as a result of its very strong local employee base, the culture of the people and the loyalty of the employees to the business and its mission,” he said. “Having been to Winnipeg many times over the last 18 months, we’re very excited to see that we can invest in the local office and the local people, because it’s a cornerstone of the business.”

Local Payworks leadership and employees moved into the company’s South Pointe office in 2024 and celebrated its grand opening in October. Payworks spent roughly $60 million on eight acres of land and its development.

aaron.epp@freepress.mb.ca