Corporate finance software provider Bill.com LLC has signed a $2.5 billion deal to acquire DivvyPay Inc., better known as Divvy, whose cloud service enables companies to issue business credit cards to their employees.

Publicly traded Bill.com said on Thursday that it’s financing the transaction with $625 million in cash and $1.875 billion worth of common stock. In a shareholder presentation, the company explained that it expects Divvy to provide a return on the investment by more than doubling its U.S. addressable market. Bill.com sees opportunities for even further growth in the future by expanding Divvy’s platform internationally. 

San Jose, California-based Bill.com provides a platform that companies use to manage payments to suppliers and send invoices to their customers. The platform has a client base of more than 115,000 businesses, mostly in the small and midsized categories.

Divvy is a Utah-based startup backed by $417 million in funding from Insight Partners, New Enterprise Associates and others. It sells a cloud service of the same name that companies can use to provide their employees with corporate credit cards for work-related expenses. Divvy’s core differentiators are that it promises to make the process of applying to corporate credit cards easier and offers an expense reporting app to reduce the amount of manual data entry employees must perform.

For Bill.com, the rationale behind the acquisition is that it will allow businesses to make their finance operations more centralized. Bill.com provides a single pane of glass for paying suppliers and sending invoices that, with the addition of Divvy’s technology, will also enable businesses to manage corporate credit cards in the same place.

“Customers will be able to manage and have real-time insight into all their B2B spend,” Bill.com Chief Executive Officer René Lacerte (pictured, left, with Divvy counterpart Blake Murray) explained in a blog post. 

The company expects the product benefits to translate into new revenue. In its shareholder presentation about the acquisition, Bill.com highlighted an opportunity to sell the Divvy service to its more than 115,000 existing customers and at the same time promote its own corporate finance platform to Divvy’s 7,000-plus clients. To drive additional growth, Bill.com will also look at offering Divvy to businesses outside the U.S.

The new sales opportunities the company hopes to unlock through the transaction will add to the approximately $100 million in annualized recurring revenue Divvy already generates. Moreover, that revenue figure is growing fast. Bill.com told shareholders that Divvy’s top line roughly doubled year-over-year in the 12 months ended in March.

The startup’s fast growth explains the premium Bill.com has agreed to pay. The deal’s $2.5 billion price tag is more than four times higher than the total amount of funding Divvy has raised to date. Alongside Insight Partners and New Enterprise Associates, another investor set to win from the acquisition is PayPal Holdings Inc., which bought a stake in Divvy earlier this year at a $1.6 billion valuation.

Divvy’s lucrative exit is likely to add to the already strong investor enthusiasm around the financial technology sector. Plaid Inc., which makes software that helps connect users’ bank accounts to services such as mobile payment apps, raised $425 million at a reported $13 billion-plus valuation last year. The investment followed a $600 million funding round for Stripe Inc. at a mammoth $95 billion valuation.

Photo: Bill.com