CONFIDENTIAL TREATMENT REQUESTED PURSUANT TO SECTION 36 OF THE INVESTMENT CANADA ACT
NOTIFICATION UNDER PART III OF THE INVESTMENT CANADA ACT
Filed with the Director of Investments Innovation, Science and Economic Development Canada
Re: Indirect Acquisition of Control of VeloPay Canada Inc. (Ontario Corporation) through the Acquisition of VeloPay Systems, Inc. (Delaware Corporation)
Filing Date: May 1, 2025
Prepared by:
Calderwood & Harkness LLP 787 Seventh Avenue, 38th Floor New York, NY 10019 United States of America
In coordination with Canadian counsel
On Behalf of:
Harrowgate Private Equity Fund IV LP A Delaware Limited Partnership
Matter Reference: Calderwood & Harkness Matter No. 1003-00003
CONFIDENTIALITY NOTICE: This notification and the information contained herein, including all schedules and exhibits attached hereto, contain confidential commercial, financial, and proprietary information of Harrowgate Private Equity Fund IV LP, VeloPay Systems, Inc., and VeloPay Canada Inc. Confidential treatment of this notification and its contents is respectfully requested pursuant to Section 36 of the Investment Canada Act (R.S.C. 1985, c. 28 (1st Supp.)). The investor respectfully requests that none of the information contained in this notification be disclosed to any person or entity, except as required by law or as necessary for the administration of the Investment Canada Act, without the prior written consent of the investor's counsel. A detailed request for confidential treatment is set forth in Schedule G hereto.
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PART I: IDENTIFICATION OF THE INVESTOR
1.1 Name and Address of the Investor
The investor filing this notification is Harrowgate Private Equity Fund IV LP (hereinafter referred to as "HPE Fund IV" or the "Investor"), a limited partnership duly organized and existing under the laws of the State of Delaware, United States of America.
The full legal name, entity type, jurisdictional details, and contact information for the Investor are set forth below:
The general partner of HPE Fund IV, which exercises investment discretion and management authority over the fund, is Harrowgate Capital Management IV LLC, a limited liability company duly organized and existing under the laws of the State of Delaware, United States of America. The details of the general partner are as follows:
Harrowgate Capital Management IV LLC serves as the sole general partner of HPE Fund IV and is responsible for all investment decisions, portfolio management, and day-to-day operations of the fund. The limited partners of HPE Fund IV consist of institutional investors, including pension funds, endowments, sovereign wealth funds, insurance companies, and family offices, none of which individually exercises control over the investment decisions of the fund.
1.2 Nature and Principal Business of the Investor
HPE Fund IV is a private equity investment fund with a total committed capital of approximately $6.8 billion (United States dollars). HPE Fund IV is a vintage 2022 fund and represents the fourth institutional fund raised by the Harrowgate Capital platform. The fund held its final close in November 2022.
The investment strategy of HPE Fund IV focuses on growth equity and buyout investments in the following sectors:
(a) Financial services technology — including payments infrastructure, banking technology, insurance technology, and capital markets technology;
(b) Infrastructure software — including cloud-based enterprise software, data management platforms, cybersecurity solutions, and developer tools; and
(c) Data analytics — including business intelligence platforms, artificial intelligence and machine learning applications, and data integration services.
HPE Fund IV targets investments in companies with enterprise values generally ranging from $500 million to $3.0 billion, with a particular emphasis on companies demonstrating strong recurring revenue characteristics, defensible competitive positions, and significant opportunities for organic and inorganic growth.
As of the date of this notification, HPE Fund IV has made three prior platform investments in the payments and financial infrastructure sector, each of which has demonstrated the fund's operational expertise and commitment to building market-leading technology businesses. These prior investments have encompassed payment orchestration, cross-border settlement technology, and merchant acquiring platforms in the United States and Europe.
The managing partners and senior investment professionals principally responsible for HPE Fund IV include:
• Richard Harrowgate — Founder and Chairman of Harrowgate Capital Management IV LLC. Mr. Harrowgate founded the Harrowgate Capital platform in 2009 and has overseen the deployment of over $18 billion in aggregate capital across four institutional funds. Mr. Harrowgate has more than 30 years of experience in private equity investing with a focus on technology-enabled businesses.
• Priya Deshmukh — Managing Partner, Fund IV, of Harrowgate Capital Management IV LLC. Ms. Deshmukh is the senior investment professional responsible for the overall management of HPE Fund IV and has been with the Harrowgate Capital platform since 2014. Ms. Deshmukh serves on the investment committee and oversees the fund's portfolio construction and value creation initiatives.
• Thomas Eriksen — Partner, Head of Financial Technology, of Harrowgate Capital Management IV LLC. Mr. Eriksen leads the firm's financial technology investment practice and was the originating partner for the VeloPay transaction. Mr. Eriksen has more than 15 years of experience in financial technology investing and previously held senior roles at leading financial institutions and technology companies.
1.3 Ownership Structure and Control of the Investor
HPE Fund IV is a Delaware limited partnership governed by its Amended and Restated Agreement of Limited Partnership dated November 15, 2022 (the "Partnership Agreement"). The governance and control structure of HPE Fund IV is summarized as follows:
General Partner. Harrowgate Capital Management IV LLC serves as the sole general partner of HPE Fund IV. Pursuant to the Partnership Agreement, the general partner has exclusive authority and responsibility for the management, conduct, and operation of the fund's business, including without limitation the authority to make, manage, monitor, and dispose of investments on behalf of the fund, to enter into agreements and commitments binding on the fund, and to cause the fund to incur indebtedness in connection with portfolio investments.
Investment Committee. All investment decisions of HPE Fund IV, including the decision to pursue the acquisition of VeloPay Systems, Inc. described herein, are made by the investment committee of Harrowgate Capital Management IV LLC. The investment committee is comprised of Richard Harrowgate, Priya Deshmukh, and Thomas Eriksen.
Limited Partners. The limited partners of HPE Fund IV are passive investors who have committed capital to the fund but do not participate in or exercise control over the investment decisions of the fund. The limited partners include a diversified group of institutional investors, none of which individually holds a controlling interest in the fund or exercises veto rights over investment decisions.
Ultimate Controlling Persons. The ultimate controlling persons of HPE Fund IV are Richard Harrowgate and Priya Deshmukh, each of whom holds a membership interest in Harrowgate Capital Management IV LLC, serves on the investment committee of the fund, and exercises investment discretion and control over fund portfolio decisions.
1.4 Country of Origin and Nationality of the Investor
The Investor is organized under the laws of the State of Delaware, United States of America. The general partner, Harrowgate Capital Management IV LLC, is similarly organized under the laws of the State of Delaware, United States of America. The principal offices of both the Investor and its general partner are located in Wilmington, Delaware, United States of America.
The Investor is not a state-owned enterprise within the meaning of the Investment Canada Act or any related guidelines. HPE Fund IV is a privately managed institutional investment fund, and neither the United States government nor any foreign government holds a direct or indirect ownership interest in, or exercises control over, the Investor or its general partner.
The United States of America is a member of the World Trade Organization ("WTO"). Accordingly, HPE Fund IV is a "WTO investor" within the meaning of the Investment Canada Act, and the applicable review thresholds for WTO investors apply to the transaction described herein. As the transaction involves the indirect acquisition of control of a Canadian business by a WTO investor, and as the value of the Canadian business does not exceed the applicable review threshold for WTO investors under Section 14.1 of the Investment Canada Act, this transaction is subject to notification rather than review under Part III of the Act.
PART II: IDENTIFICATION OF THE CANADIAN BUSINESS
2.1 Name and Address of the Canadian Business
The Canadian business that is the subject of this notification is VeloPay Canada Inc. (hereinafter referred to as "VeloPay Canada" or the "Canadian Business"), a corporation incorporated and existing under the laws of the Province of Ontario, Canada.
VeloPay Canada maintains its principal office and operations in Toronto, Ontario, Canada, which serves as one of four office locations maintained by the VeloPay corporate family globally. The Toronto office houses VeloPay Canada's operational, engineering, and support personnel who contribute to the development and maintenance of VeloPay's payments processing platform.
2.2 Nature and Principal Business Activities of the Canadian Business
VeloPay Canada is a wholly-owned subsidiary of VeloPay Systems, Inc., a corporation organized under the laws of the State of Delaware, United States of America (hereinafter referred to as "VeloPay" or the "Target"). VeloPay Canada was established to support and carry out VeloPay's Canadian operations as part of VeloPay's broader Ridgeway Partners LLC processing and merchant acquiring platform.
Overview of VeloPay's Business. VeloPay operates a cloud-based payments processing and merchant acquiring platform that enables merchants of all sizes to accept, process, and manage electronic payments across multiple channels, including in-store, online, and mobile. VeloPay's platform provides end-to-end payment processing capabilities, from authorization and clearing to settlement, along with a suite of value-added services.
The principal business activities of VeloPay, including those conducted through VeloPay Canada, include:
(a) Payment Processing. VeloPay processes electronic payment transactions on behalf of merchants, including credit card, debit card, ACH, and alternative payment method transactions. VeloPay processes approximately $87 billion in annualized gross payment volume across more than 14,000 merchants in the United States and Canada.
(b) Merchant Acquiring. VeloPay provides merchant acquiring services, enabling merchants to establish and maintain merchant accounts for the acceptance of electronic payments, and manages the settlement of funds to merchant bank accounts.
(c) SaaS Analytics and Fraud Detection. VeloPay offers a proprietary SaaS-based analytics dashboard and fraud detection suite that provides merchants with real-time transaction monitoring, reporting, and fraud prevention capabilities. The fraud detection suite utilizes machine learning algorithms and behavioral analytics to identify and prevent fraudulent transactions.
(d) Payment Gateway Services. Through its subsidiary PayStream Gateway LLC (acquired by VeloPay in 2021 for $45 million), VeloPay provides payment gateway technology that facilitates the secure transmission of transaction data between merchants, payment processors, and acquiring banks.
Revenue Model. VeloPay generates revenue through several complementary streams:
(i) Interchange-plus processing fees — transaction-based fees charged to merchants for payment processing services, consisting of card network interchange fees plus a processing markup;
(ii) SaaS subscription fees — recurring monthly or annual subscription fees for access to VeloPay's analytics dashboard and fraud detection suite; and
(iii) Gateway transaction fees — per-transaction fees for payment gateway services provided through the PayStream Gateway platform.
Canadian Operations. VeloPay Canada supports the broader VeloPay platform through its Toronto, Ontario operations. The Canadian Business employs engineering, product development, customer support, and operational personnel who contribute to the development, maintenance, and support of VeloPay's payments processing platform. The specific employee count and financial details of VeloPay Canada are set forth in Schedule A to this notification.
Global Workforce. VeloPay and its subsidiaries employ approximately 1,340 employees across four office locations: Austin, Texas (headquarters); Denver, Colorado; Toronto, Ontario, Canada; and Lisbon, Portugal. The Toronto, Ontario office is integral to VeloPay's engineering and product development capabilities.
2.3 Financial Information of the Canadian Business
VeloPay Canada is an operating subsidiary within the VeloPay corporate family. Set forth below is consolidated financial information for VeloPay Systems, Inc. (as the parent corporation of VeloPay Canada) for the fiscal year ended December 31, 2024 ("FY2024"), as audited by Vance Thornbury & Co. LLP (engagement partner: Robert Paulsen; 1700 Market Street, Suite 2900, Philadelphia, PA 19103):
The financial information set forth above represents the consolidated results of VeloPay Systems, Inc. and all of its subsidiaries, including VeloPay Canada. A breakdown of VeloPay Canada's revenues, assets, and employees attributable specifically to the Canadian Business is provided separately in Schedule A to this notification.
The Canadian Business constitutes a portion of VeloPay's overall global operations. The employee count at VeloPay's Toronto, Ontario office is included within the approximately 1,340 total headcount referenced above. VeloPay Canada's revenues are derived from intercompany arrangements with VeloPay Systems, Inc. and from services provided to Canadian merchants, as further detailed in Schedule A.
2.4 Current Ownership of the Canadian Business
VeloPay Canada is 100% owned by VeloPay Systems, Inc., the Delaware parent corporation. VeloPay Canada has no minority shareholders, and all of its issued and outstanding shares are held directly by VeloPay Systems, Inc.
The key stockholders of VeloPay Systems, Inc., as of the date of this notification, are as follows:
The percentages set forth above are calculated on a fully diluted basis. The fully diluted capitalization of VeloPay Systems, Inc. is as follows:
No shareholder of VeloPay Systems, Inc. is a state-owned enterprise or an entity controlled by or affiliated with a foreign government.
PART III: DESCRIPTION OF THE INVESTMENT
3.1 Structure of the Transaction
The investment that is the subject of this notification involves the acquisition of 100% of the issued and outstanding equity securities of VeloPay Systems, Inc. by HPE Fund IV through a reverse triangular merger under Section 251 of the Delaware General Corporation Law ("DGCL"), as further described below.
Formation of Merger Subsidiary. In connection with the transaction, HPE Fund IV caused the formation of Harrowgate Velocity Merger Sub Inc. ("Merger Sub"), a corporation newly formed under the laws of the State of Delaware for the sole purpose of effectuating the merger. The details of Merger Sub are as follows:
Merger Sub is a wholly-owned subsidiary of HPE Fund IV and was formed solely for the purpose of facilitating the merger with VeloPay Systems, Inc. Merger Sub has not conducted any business operations, acquired any assets, or incurred any liabilities other than those incidental to its formation and the execution and delivery of the merger agreement and related transaction documents.
Merger Mechanics. Pursuant to the terms of the Agreement and Plan of Merger (as described in Section 3.2 below), the transaction will be effected as follows:
(a) At the effective time of the merger (the "Effective Time"), Merger Sub will merge with and into VeloPay Systems, Inc.;
(b) VeloPay Systems, Inc. will survive the merger as the surviving corporation (the "Surviving Corporation") and will become a wholly-owned subsidiary of HPE Fund IV;
(c) Merger Sub will cease to exist upon the Effective Time;
(d) At the Effective Time, each share of common stock of VeloPay Systems, Inc. issued and outstanding immediately prior to the Effective Time (other than shares held by VeloPay Systems, Inc. as treasury shares, shares held by HPE Fund IV or Merger Sub, and dissenting shares, if any) will be converted into the right to receive the per-share merger consideration in cash, without interest;
(e) All stock options, restricted stock units, and warrants of VeloPay Systems, Inc. outstanding immediately prior to the Effective Time will be treated in accordance with the terms of the merger agreement, as described in Schedule E; and
(f) The certificate of incorporation and bylaws of VeloPay Systems, Inc. as in effect immediately prior to the Effective Time will be amended and restated as the certificate of incorporation and bylaws of the Surviving Corporation.
Indirect Acquisition of the Canadian Business. As a result of the merger, HPE Fund IV will acquire 100% ownership of VeloPay Systems, Inc. (the Surviving Corporation), which in turn owns 100% of VeloPay Canada Inc. Accordingly, the transaction constitutes an indirect acquisition of control of VeloPay Canada Inc., a Canadian business, within the meaning of Part III of the Investment Canada Act (R.S.C. 1985, c. 28 (1st Supp.)). VeloPay Canada will continue to be a wholly-owned subsidiary of VeloPay Systems, Inc. following the closing of the merger, with no change to VeloPay Canada's corporate existence, organizational documents, or direct ownership structure.
3.2 Merger Agreement
The transaction is governed by the Agreement and Plan of Merger (the "Merger Agreement"), entered into as of March 18, 2025, among:
(i) Harrowgate Private Equity Fund IV LP, as the acquiring entity;
(ii) Harrowgate Velocity Merger Sub Inc., as the merger subsidiary; and
(iii) VeloPay Systems, Inc., as the target.
A summary of the key terms of the Merger Agreement, together with a copy of the execution version thereof, is set forth in Schedule E to this notification.
Board and Stockholder Approvals. The following approvals have been obtained in connection with the execution and delivery of the Merger Agreement:
(a) VeloPay Board Approval. The Board of Directors of VeloPay Systems, Inc. (the "VeloPay Board") unanimously approved the Merger Agreement and the transactions contemplated thereby, and resolved to recommend that the stockholders of VeloPay Systems, Inc. adopt the Merger Agreement, at a meeting of the VeloPay Board held on March 17, 2025. The VeloPay Board determined that the merger is advisable and fair to, and in the best interests of, VeloPay Systems, Inc. and its stockholders.
(b) HPE Fund IV Approval. The investment committee of Harrowgate Capital Management IV LLC, acting on behalf of HPE Fund IV, approved the Merger Agreement and the transactions contemplated thereby on March 17, 2025.
(c) Stockholder Written Consent. On March 18, 2025, stockholders of VeloPay Systems, Inc. holding approximately 63.1% of the outstanding shares of common stock (calculated on a fully diluted basis) delivered written consents adopting and approving the Merger Agreement pursuant to Section 228 of the DGCL and the provisions of VeloPay's certificate of incorporation and bylaws authorizing action by written consent. The stockholders delivering written consents did so pursuant to a Stockholder Support Agreement dated March 18, 2025, and include the following:
An Information Statement was mailed to all stockholders of VeloPay Systems, Inc. who did not deliver written consents on April 14, 2025, pursuant to Section 228(e) of the DGCL.
3.3 Consideration
The merger consideration to be paid in connection with the transaction is as follows:
At the Effective Time, each share of common stock of VeloPay Systems, Inc. (other than excluded shares and dissenting shares, if any) will be converted into the right to receive $20.00 in cash, without interest. Outstanding stock options will be cancelled and converted into the right to receive the excess, if any, of $20.00 over the applicable exercise price, multiplied by the number of shares subject to such option. Outstanding restricted stock units will be cancelled and converted into the right to receive $20.00 per RSU. Outstanding warrants will be treated in accordance with their terms.
The aggregate merger consideration of $1,900,000,000 implies the following valuation multiples based on VeloPay's FY2024 consolidated financial results:
The per-share merger consideration was determined through arm's-length negotiations between HPE Fund IV and VeloPay Systems, Inc. and their respective financial advisors, and was approved by the VeloPay Board based on, among other things, a fairness opinion delivered by Velthryn Greer & Associates, VeloPay's financial advisor.
3.4 Financing of the Investment
The aggregate merger consideration of $1,900,000,000, together with transaction expenses and the refinancing of VeloPay's existing indebtedness, will be funded through a combination of equity contributions from HPE Fund IV and third-party debt financing, as described below.
Sources of Funds:
Note: Totals may not sum precisely due to rounding. Amounts in excess of the $1,900,000,000 aggregate merger consideration are allocated to the refinancing of existing target indebtedness and the payment of estimated transaction expenses.
Uses of Funds:
Note: Total uses exceed total sources as certain amounts, including the existing debt payoff, are funded from both new debt proceeds and cash on hand. Detailed sources and uses reconciliation available upon request.
Equity Financing. HPE Fund IV will contribute $1,140,000,000 in equity to fund the transaction, representing approximately 60% of the aggregate deal value. An Equity Commitment Letter was executed on February 14, 2025 by Harrowgate Capital Management IV LLC, acting on behalf of HPE Fund IV, pursuant to which HPE Fund IV has committed to contribute such equity amount to Merger Sub (or the Surviving Corporation, as applicable) at or prior to the closing of the merger, subject to the terms and conditions of the Merger Agreement.
Debt Financing. The debt financing for the transaction consists of the following facilities:
(a) Senior Secured Term Loan. A senior secured term loan in an aggregate principal amount of $500,000,000, to be provided by Tralvendo National Bank as lead arranger and administrative agent. The material terms of the term loan are as follows:
• Lender / Administrative Agent: Tralvendo National Bank, 100 Federal Street, 30th Floor, Boston, MA 02110
• Facility Amount: $500,000,000
• Interest Rate: SOFR + 375 basis points
• Tenor: 7 years from the closing date
• Commitment Letter Reference: CRE-2025-SPF-0441
• Commitment Letter Date: February 14, 2025
(b) Senior Secured Revolving Credit Facility. A senior secured revolving credit facility in an aggregate commitment amount of $260,000,000, to be provided by Prairie State Bank, N.A. as co-arranger and administrative agent. The material terms of the revolving credit facility are as follows:
• Lender / Administrative Agent: Prairie State Bank, N.A., 231 South LaSalle Street, Suite 4400, Chicago, IL 60604
• Facility Commitment Amount: $260,000,000
• Expected Draw at Closing: Approximately $254,700,000
• Interest Rate: SOFR + 325 basis points
• Tenor: 5 years from the closing date
• Commitment Letter Reference: Included in Debt Commitment Letter (CRE-2025-SPF-0441)
• Commitment Letter Date: February 14, 2025
The Debt Commitment Letter was executed on February 14, 2025 by Tralvendo National Bank and Prairie State Bank, N.A. and delivered to HPE Fund IV, providing committed financing for the term loan and revolving credit facility, subject to customary conditions precedent. A summary of the Debt Commitment Letter is set forth in Schedule F to this notification.
Existing Indebtedness. VeloPay Systems, Inc. has an existing credit facility with Meridian Commercial Credit Corp. with an aggregate outstanding balance of approximately $112,000,000 as of the date of this notification. This existing credit facility will be repaid in full and terminated at the closing of the merger, with the repayment funded from the proceeds of the new Senior Secured Term Loan.
Transaction Expenses. The estimated aggregate transaction expenses (buyer-side and seller-side combined) are approximately $48,500,000, which include legal fees, financial advisory fees, accounting and auditing fees, regulatory filing fees, financing fees, and other customary transaction costs. Transaction expenses are expected to be funded from a combination of target cash on hand and proceeds of the debt financing.
Rollover Equity. In addition to the foregoing, Nathan Aldridge (CEO & Co-Founder) and Sonia Reyes-Watkins (CTO & Co-Founder) have agreed to roll over a portion of their equity consideration into the post-closing capital structure of the Surviving Corporation through Harrowgate Velocity Co-Invest LP, as described in Part IV below. The rollover amounts are $14,200,000 (Aldridge) and $9,700,000 (Reyes-Watkins), for a total rollover of $23,900,000. These rollover amounts reduce the cash merger consideration payable to such individuals at closing.
PART IV: ORGANIZATIONAL CHART
4.1 Pre-Transaction Corporate Structure
Set forth below is a description of the corporate structure of VeloPay Systems, Inc. and its subsidiaries as of the date of this notification, prior to the consummation of the merger (the "Pre-Transaction Structure"). A detailed organizational chart is included in Schedule B to this notification.
VeloPay Systems, Inc. (Delaware corporation) is the ultimate parent entity of the VeloPay corporate family. VeloPay Systems, Inc. directly owns 100% of the equity interests in each of the following five wholly-owned subsidiaries:
1. VeloPay Processing LLC — A Delaware limited liability company that serves as VeloPay's payment processing infrastructure entity. VeloPay Processing LLC holds the technology assets and operational infrastructure used to authorize, clear, and settle electronic payment transactions on behalf of VeloPay's merchant customers.
2. VeloPay Canada Inc. — An Ontario corporation that serves as VeloPay's Canadian operating subsidiary. VeloPay Canada supports the VeloPay platform through its Toronto, Ontario operations, including engineering, product development, customer support, and operational functions.
3. VeloPay Europe, Unipessoal Lda. — A Portuguese limitada (single-member limited liability company) that serves as VeloPay's Lisbon-based research and development center and European operations hub. VeloPay Europe employs engineering and product development personnel focused on platform development and European market expansion.
4. VeloPay Fraud intelligence Inc. — A Delaware corporation that operates VeloPay's proprietary fraud detection and analytics SaaS platform. VeloPay Fraud intelligence develops and maintains the machine learning-based fraud prevention technology that is offered to VeloPay's merchant customers as a value-added service.
5. PayStream Gateway LLC — A Delaware limited liability company that operates the PayStream payment gateway technology platform. PayStream Gateway was acquired by VeloPay Systems, Inc. in 2021 for approximately $45 million and provides payment gateway services that facilitate the secure transmission of transaction data between merchants, processors, and acquiring banks.
In the Pre-Transaction Structure, VeloPay Systems, Inc. is owned by the stockholders described in Section 2.4 of this notification, with no single stockholder holding a majority interest.
4.2 Post-Transaction Corporate Structure
Set forth below is a description of the anticipated corporate structure following the consummation of the merger (the "Post-Transaction Structure"). A detailed organizational chart is included in Schedule B to this notification.
In the Post-Transaction Structure:
(a) Harrowgate Private Equity Fund IV LP (Delaware limited partnership) will be the ultimate parent entity, holding 100% of the equity of the Surviving Corporation (VeloPay Systems, Inc.), subject to the co-investment vehicle described below.
(b) Harrowgate Capital Management IV LLC (Delaware limited liability company) will continue to serve as the sole general partner of HPE Fund IV, exercising investment discretion and management authority over the fund and, indirectly, over the Surviving Corporation.
(c) VeloPay Systems, Inc. (Delaware corporation) will be the Surviving Corporation following the merger. VeloPay Systems, Inc. will be wholly owned by HPE Fund IV (subject to the co-investment arrangement) and will continue to serve as the parent entity of all five subsidiaries described in Section 4.1 above.
(d) All five subsidiaries of VeloPay Systems, Inc. — VeloPay Processing LLC, VeloPay Canada Inc., VeloPay Europe, Unipessoal Lda., VeloPay Fraud intelligence Inc., and PayStream Gateway LLC — will remain unchanged and will continue as wholly-owned subsidiaries of VeloPay Systems, Inc. There will be no change to the corporate existence, organizational documents, or direct ownership of any of these subsidiaries.
(e) Harrowgate Velocity Co-Invest LP (Delaware limited partnership) will serve as a co-investment vehicle holding rollover equity from certain members of VeloPay management. The details of the co-investment vehicle are as follows:
The Co-Invest LP will hold rollover equity interests contributed by the following management investors:
The rollover equity represents a portion of the merger consideration that would otherwise be payable to Mr. Aldridge and Ms. Reyes-Watkins at the closing of the merger, which they have elected to reinvest in the post-closing equity capital structure of the Surviving Corporation through the Co-Invest LP, pursuant to the terms of their respective rollover agreements. Harrowgate Capital Management IV LLC serves as the general partner of the Co-Invest LP and will exercise management and investment discretion over the vehicle.
PART V: BUSINESS PLANS FOR THE CANADIAN BUSINESS
5.1 Continuation of Canadian Operations
HPE Fund IV intends to continue and expand VeloPay's Canadian operations through VeloPay Canada Inc. following the closing of the merger. The acquisition of VeloPay Systems, Inc. is consistent with HPE Fund IV's investment strategy of acquiring and building market-leading financial services technology businesses, and the Investor views VeloPay's Canadian presence as an important component of the company's overall platform and growth trajectory.
HPE Fund IV has no current plans to materially reduce Canadian employment, relocate Canadian operations, or discontinue VeloPay Canada's business activities. VeloPay Canada's Toronto, Ontario office will continue to operate as an integral part of VeloPay's global platform, providing engineering, product development, customer support, and operational functions that support VeloPay's payments processing and merchant acquiring business.
HPE Fund IV's investment thesis for the VeloPay acquisition is predicated on the continued growth and enhancement of VeloPay's platform across all of its operating geographies, including Canada. The Investor intends to support VeloPay's management team in pursuing organic growth initiatives, including the expansion of VeloPay's merchant base in Canada and the development of new product capabilities to serve the Canadian market. HPE Fund IV also anticipates that VeloPay may pursue strategic add-on acquisitions in the payments and financial technology sector, which could include opportunities that would further enhance VeloPay's Canadian operations.
The Investor's growth-oriented approach to portfolio management is consistent with its prior platform investments in the payments and financial infrastructure sector, in which HPE Fund IV has a demonstrated track record of supporting management teams, investing in product development and technology, and expanding the geographic and customer reach of its portfolio companies.
5.2 Management Continuity
HPE Fund IV places significant value on management continuity and has structured the transaction to ensure the retention of VeloPay's experienced leadership team following the closing of the merger. The key management continuity arrangements are as follows:
(a) Nathan Aldridge (CEO & Co-Founder) will continue to serve as the Chief Executive Officer of VeloPay Systems, Inc. and will retain operational responsibility for VeloPay's business, including its Canadian operations. Mr. Aldridge has entered into a rollover agreement pursuant to which he will reinvest $14,200,000 of his merger consideration in the post-closing equity structure through Harrowgate Velocity Co-Invest LP, and a 3-year non-competition agreement restricting him from competing with VeloPay's business during his employment and for a period of three years following any termination of employment.
(b) Sonia Reyes-Watkins (CTO & Co-Founder) will continue to serve as the Chief Technology Officer of VeloPay Systems, Inc. and will retain responsibility for VeloPay's technology strategy, engineering organization, and product development, including the engineering resources in VeloPay Canada's Toronto office. Ms. Reyes-Watkins has entered into a rollover agreement pursuant to which she will reinvest $9,700,000 of her merger consideration in the post-closing equity structure through Harrowgate Velocity Co-Invest LP, and a 3-year non-competition agreement on terms substantially similar to those of Mr. Aldridge.
(c) Marcus Langford (CFO) will continue to serve as the Chief Financial Officer of VeloPay Systems, Inc. and will retain responsibility for VeloPay's financial management, reporting, and treasury functions.
(d) Canadian Management. The management and senior personnel of VeloPay Canada Inc. are expected to continue in their current roles following the closing of the merger. HPE Fund IV has no plans to replace or materially alter the Canadian management team and recognizes the importance of maintaining continuity of leadership in VeloPay's Canadian operations.
5.3 Canadian Employment
HPE Fund IV intends to retain the current employees of VeloPay Canada Inc. at VeloPay's Toronto, Ontario office following the closing of the merger. There are no planned layoffs, reductions in force, or other material changes to the Canadian workforce in connection with the transaction.
VeloPay Canada's employees are engaged in engineering, product development, customer support, and operational activities that are critical to VeloPay's platform and business. HPE Fund IV recognizes the value of VeloPay Canada's workforce and intends to support the continued growth of VeloPay's Canadian team as part of its broader strategy to invest in VeloPay's technology and operational capabilities.
The Investor notes that, consistent with its growth-oriented investment approach, it anticipates that VeloPay Canada's headcount may increase over time as VeloPay expands its platform and customer base in the Canadian market.
PART VI: REGULATORY APPROVALS AND TRANSACTION TIMELINE
6.1 Other Regulatory Approvals Required
The closing of the merger is subject to the satisfaction or waiver of certain regulatory and governmental conditions, in addition to the Investment Canada Act notification that is the subject of this filing. The principal regulatory approvals and filings required in connection with the transaction are described below.
United States Hart-Scott-Rodino Antitrust Improvements Act of 1976 (HSR Act). The merger is subject to the pre-merger notification and waiting period requirements of the HSR Act (15 U.S.C. § 18a). HPE Fund IV and VeloPay Systems, Inc. filed their respective HSR Act notification forms with the U.S. Federal Trade Commission and the Antitrust Division of the U.S. Department of Justice on April 2, 2025 (HSR Transaction Number: 25-0198374).
On May 8, 2025, the U.S. Department of Justice issued a Request for Additional Information and Documentary Material (commonly known as a "Second Request") in connection with its review of the merger. HPE Fund IV and VeloPay Systems, Inc. are cooperating fully with the Department of Justice in connection with the Second Request. The parties certified substantial compliance with the Second Request on June 27, 2025. As of the date of this notification, HSR clearance remains pending. (Note: HSR clearance was subsequently obtained on July 15, 2025, following the expiration of the Second Request waiting period without challenge by the Department of Justice.)
U.S. State Money Transmitter Licenses. VeloPay Systems, Inc. and its subsidiaries hold money transmitter licenses issued by regulatory authorities in 47 states of the United States and the District of Columbia. Certain of these money transmitter licenses require prior approval, consent, or notification from the applicable state regulatory authority in connection with a change of control of the licensee. Specifically, 31 states require change of control approval or notification filings.
HPE Fund IV and VeloPay Systems, Inc. have commenced the process of preparing and submitting the required change of control applications and notifications to the applicable state regulatory authorities. As of the date of this notification, filings are ongoing in the applicable jurisdictions. (Note: All required state money transmitter change of control approvals and notifications were subsequently completed on July 18, 2025.)
VeloPay Stockholder Approval. As described in Section 3.2 of this notification, the adoption and approval of the Merger Agreement by the stockholders of VeloPay Systems, Inc. was obtained by written consent of stockholders holding approximately 63.1% of the outstanding shares of common stock on March 18, 2025, pursuant to Section 228 of the DGCL. An Information Statement was mailed to all non-consenting stockholders on April 14, 2025 in accordance with Section 228(e) of the DGCL. No stockholder meeting was required in connection with the merger, and the stockholder approval condition has been satisfied.
Delaware Secretary of State Filing. The consummation of the merger requires the filing of a Certificate of Merger with the Secretary of State of the State of Delaware, which will be filed at or promptly following the closing of the merger.
Investment Canada Act (This Filing). This notification constitutes the required filing under Part III of the Investment Canada Act with respect to the indirect acquisition of control of VeloPay Canada Inc. by HPE Fund IV. To the knowledge of the Investor, no other regulatory approvals or filings are required in Canada in connection with the transaction.
6.2 Anticipated Closing Date
The closing of the merger (the "Closing") is anticipated to occur promptly following the receipt of all required regulatory clearances and the satisfaction or waiver of all other closing conditions under the Merger Agreement. The principal remaining closing conditions as of the date of this notification include:
(a) Expiration or termination of the waiting period under the HSR Act (including any extension thereof resulting from a Second Request);
(b) Receipt of Investment Canada Act clearance (or expiration of the applicable waiting period without an order to review);
(c) Receipt of all required state money transmitter change of control approvals and notifications;
(d) Absence of any order, injunction, or decree by any court or governmental authority of competent jurisdiction prohibiting the consummation of the merger;
(e) Accuracy of representations and warranties (subject to customary materiality qualifiers);
(f) Compliance with covenants and agreements; and
(g) Absence of a material adverse effect with respect to VeloPay.
Based on the current status of the regulatory approval process, the Closing is anticipated to occur in the third quarter of 2025. (Note: The Closing subsequently occurred on July 22, 2025.)
The Merger Agreement provides for an outside date of December 31, 2025 (the "Outside Date"), beyond which either party may terminate the Merger Agreement if the Closing has not occurred, subject to certain exceptions and extension provisions.
6.3 Key Transaction Timeline
The following table sets forth the key milestones and anticipated timeline for the transaction:
PART VII: ADVISORS
7.1 Legal Advisors to the Investor
Calderwood & Harkness LLP serves as primary legal counsel to HPE Fund IV in connection with the transaction, including the negotiation and documentation of the Merger Agreement and related transaction documents, U.S. regulatory filings, and the preparation of this Investment Canada Act notification.
Calderwood & Harkness LLP 787 Seventh Avenue, 38th Floor New York, NY 10019 United States of America
Sandra Tung — Responsible Partner, Mergers & Acquisitions Oliver Mackenzie — Billing Partner, Mergers & Acquisitions Howard Bellamy — Specialist Partner, Antitrust & Competition
This notification has been prepared by Calderwood & Harkness LLP in coordination with Canadian counsel, who has assisted with the review of the Investment Canada Act filing requirements and the preparation and filing of this notification. Contact information for Canadian counsel is set forth in Section 9.2 below.
7.2 Financial Advisor to the Investor
Pendleton Hawkes & Co. serves as financial advisor to HPE Fund IV in connection with the transaction, providing financial advisory services including valuation analysis, transaction structuring, and negotiation support.
Pendleton Hawkes & Co. 383 Madison Avenue, 17th Floor New York, NY 10179 United States of America
David Constantinou — Lead Managing Director
7.3 Legal Advisors to the Target
Whitford Jessup & Crane LLP serves as primary legal counsel to VeloPay Systems, Inc. in connection with the transaction, including the negotiation and documentation of the Merger Agreement and related transaction documents.
Whitford Jessup & Crane LLP 600 Congress Avenue, Suite 2400 Austin, TX 78701 United States of America
Rebecca Thornton-Hayes — Lead Partner
Fielding McGrath LLP serves as antitrust and regulatory counsel to VeloPay Systems, Inc. in connection with the transaction, including HSR Act filings and related antitrust matters.
Fielding McGrath LLP 1501 K Street NW, Suite 1200 Washington, D.C. 20005 United States of America
Amara Osei — Lead Partner