Hg Capital Invests in Payworks to Accelerate Growth in Canada

A significant investment has been made in Winnipeg-based workforce management company Payworks Inc., as UK-based private equity firm Hg Capital has acquired a stake in the organization. This marks the first time in Payworks’ 25-year history that it has sought outside investment, a decision that aims to accelerate the company’s growth trajectory in the Canadian market.

The announcement was made on October 30, 2023, although the financial details of the deal remain undisclosed. Company president Michael Penman expressed optimism about the partnership, stating, “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.” He emphasized that the collaboration would enhance their growth and product offerings.

Payworks serves approximately 45,000 customers and processes payroll for about 950,000 employees, primarily within small businesses. The company generates over $100 million in annual revenue, although Penman did not specify an exact figure during the announcement. With a workforce of 650 employees, including around 400 based in Winnipeg, the company operates its headquarters in the city’s South Pointe neighbourhood.

Strategic Growth Through Investment

The partnership with Hg Capital is expected to facilitate the development of new payroll and human resources products, enhancing client experience. Penman stated that this strategic investment would allow Payworks to innovate more rapidly and extend its market reach across Canada.

Hg Capital, headquartered in London, manages around US$100 billion in assets, with a portfolio exceeding 50 companies valued at US$180 billion. The firm consistently reports revenue growth exceeding 20% annually. According to Alexander Johnson, a director at Hg, the firm identified Payworks while conducting extensive research on the Canadian marketplace, which included surveying over 600 payroll and HR customers. Johnson highlighted that Payworks exhibited the highest customer satisfaction among the products reviewed, a critical factor in Hg’s decision to invest.

The founders of Payworks, Barb Gamey, John Loewen, and Dave Johnston, established the company in 2000. While Gamey remains actively involved in management, Loewen and Johnston serve as board members. In a statement, Gamey expressed her excitement about the partnership, saying, “The Payworks ownership group is excited to welcome Hg to our partnership. Their investment enables us to accelerate our innovation and value creation agenda, positioning Payworks for sustained leadership and diversification in the Canadian market.”

Commitment to Community and Local Operations

Hg’s investment aligns with Payworks’ ongoing commitment to Winnipeg and the broader Canadian community. The company has contributed over $2 million to more than 250 charitable organizations nationwide in the past year. Additionally, Payworks employees dedicated 2,200 hours to volunteer work during company time in 2024, a figure they are on track to surpass this year.

Johnson confirmed that Hg supports Payworks maintaining its headquarters in Winnipeg and continuing its community engagement. He noted, “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.”

In 2024, Payworks celebrated the opening of its new office in South Pointe after investing approximately $60 million in an eight-acre development. This move underscores the company’s dedication to its local workforce and community ties.

This strategic partnership heralds a new chapter for Payworks, with the potential to significantly enhance its product offerings and market presence while staying true to its roots in Winnipeg.