Related Party Transaction

12 Months Ended

Dec. 31, 2021


27.			Related Party Transaction

Relationship with SBI/Bell Bank

As of December 31, 2021, the seller of Discovery Benefits, SBI, holds a 4.53 percent equity interest in the Company's U.S. Health business. Bell Bank, a subsidiary of SBI, is a revolving loan lender under the Company's Amended and Restated Credit Agreement. As of December 31, 2021, there was $119.8 million outstanding in total on the Revolving Credit Facility, with available capacity of $50.0 million, directly attributable to Bell Bank. As of December 31, 2020, there were no amounts outstanding, with available capacity of $50.0 million attributable to Bell Bank.

On April 1, 2021, WEX Inc. completed the acquisition of certain contractual rights to serve as a custodian or sub-custodian to certain HSAs from the HealthcareBank division of Bell Bank. On the closing of the acquisition, WEX Inc. paid Bell Bank initial cash consideration of $200.0 million. Pursuant to the purchase agreement, WEX Inc. agreed to make an additional deferred cash payment of $25.0 million in July 2023 and a second additional deferred cash payment of $25.0 million in January 2024, while also agreeing to additional consideration payable annually that is contingent, and based, upon any future increases in the Federal Funds rate.

As part of WEX Inc.’s purchase of the HSA contractual rights from Bell Bank, as further described in Note 4, Acquisitions, WEX Inc. and SBI entered into the PO Holding Operating Agreement, which reflected the Company’s purchase of $11.2 million of SBI’s non-controlling interest in PO Holding, which reduced SBI’s ownership percentage from 4.9 percent to 4.53 percent, among other things further described in Note 19, Redeemable Non-Controlling Interest. Pursuant to the PO Holding Agreement, SBI subsequently elected to participate in the equity financing of the benefitexpress Acquisition and paid the Company $12.5 million, resulting in a reduction to the second deferred payment due to Bell Bank by the Company to $12.5 million, which is payable in January 2024.

As of December 31, 2021, no deferred cash payments or additional consideration was paid to Bell Bank.

Relationship with Wellington

On October 14, 2021, WEX Inc. transferred $960.0 million of custodial cash assets previously held by a third-party depository partner, to WEX Bank, as the depository partner, to be managed and invested. As of December 31, 2021, the depository assets totaled $956.5 million. Wellington Management Company LLP, an entity affiliated with Wellington Management Group, LLP (“Wellington”), has been appointed investment manager for the funds. Wellington beneficially owned approximately 9 percent of the Company’s outstanding common stock as of December 31, 2021 based on information reported on a Schedule 13G/A filed with the SEC on February 4, 2022. The Company incurred $0.1 million in investment management fees payable to Wellington during 2021. Refer to Note 7, Investment Securities, for further information on these investment securities.

Warburg Pincus Convertible Notes

On July 1, 2020, the Company closed on a private placement transaction with an affiliate of funds managed by Warburg Pincus LLC, pursuant to which the Company issued convertible senior unsecured notes due in 2027 in an aggregate principal amount of $310 million and 577,254 shares of common stock, with gross proceeds in respect of the common stock of $90 million. After giving effect to the purchase of the common stock and Convertible Notes, on an as-converted basis, Warburg Pincus owned approximately 4.7 percent of the Company's outstanding common stock on the closing date of the private placement. Refer to Note 16, Financing and Other Debt, for more information regarding the Convertible Notes. Under the terms of the private placement, for so long as Warburg Pincus continues to own at least 50 percent of the aggregate amount of the shares issued and the shares of common stock issuable upon conversion of the Convertible Notes, Warburg Pincus is entitled to nominate an individual to the board of directors. As of December 31, 2021 and 2020, such nominee was a member of the Company’s board of directors and a managing director at Warburg Pincus LLC.

The Company has a written policy regarding entering certain transactions in which any member of the board of directors has a direct or indirect material interest. Pursuant to this policy, the private placement was approved by the Corporate Governance Committee of the Company’s board of directors, after it had reviewed and considered all relevant facts and circumstances, including, but not limited to, whether the transaction was entered into on terms no less favorable to the Company than terms that could have been reached with an unrelated third party and the interest of the related person in the

transaction. Following approval by the Corporate Governance Committee of the board of directors, the private placement was approved by the disinterested members of the Company’s board of directors.