Investor Conference Call Scheduled for Today
at 8:30 a.m. ET
Clearwater Analytics (NYSE: CWAN) (“Clearwater”) and Enfusion,
Inc. (NYSE: ENFN) (“Enfusion”) today announced their entry into a
definitive merger agreement for Clearwater to acquire Enfusion, a
leader in software-as-a-service (SaaS) solutions for the investment
management and hedge fund industry. The purchase price is $11.25
per share, delivered in an approximately equal mix of cash and
stock. Additionally, Clearwater will pay $30 million to terminate
Enfusion’s tax receivable agreement (TRA). This equates to a
purchase price of approximately $1.5 billion.
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“Today’s announcement is about creating a future where our
clients benefit from the synergy of two highly complementary,
innovative software leaders, paving the way for a unified,
cloud-native front-to-back platform that’s primed to serve
institutional investors like never before. We expect to accelerate
growth based on our increased right-to-win, higher back-to-base
sales, greater presence across key geographies and increased Total
Addressable Market (TAM). Coupled with our operating rigor and use
of Generative AI, we have high confidence that we can drive
meaningfully improved unit economics at Enfusion while also growing
its emerging managed services business,” said Sandeep Sahai, CEO of
Clearwater Analytics. “Most importantly, this acquisition enables
seamless data management from the front office to the back office,
unlocking powerful network effects that amplify client value.”
Strategic Rationale
The acquisition of Enfusion accelerates Clearwater’s vision of
building the first cloud-native front-to-back platform for the
entire investment management industry:
Front-to-Back Platform Leadership: Enfusion’s
front-office capabilities—including IBOR, portfolio and order
management—will be integrated with Clearwater’s middle and
back-office solutions and client reporting capabilities to enable a
unified, cloud-native platform that seamlessly integrates with
other technologies. This will allow clients to avoid the
error-prone data handoff that happens between the front, middle and
back office, which in turn creates major reconciliation issues
resulting in inefficiencies, inaccuracies and increased risk.
Enhanced Right to Win in Asset Management: Approximately
two-thirds of Clearwater’s core TAM comes from the asset management
industry, but the company derives only one-third of its revenue
from it. Enfusion has developed a next-generation platform for
asset managers, starting its innovation in the front office.
Clearwater, on a parallel journey, has built a disruptive platform
focused on the middle and back office, specifically in data
ingestion, aggregation, accounting, compliance, regulatory
reporting, and comprehensive client reporting. By combining both
sets of solutions and engineering expertise, Clearwater aims to
significantly enhance its right to win with asset managers across
various segments, geographies, and sizes.
Expanded Capabilities for Clients: With very high levels
of client satisfaction, as reflected in Clearwater’s high NPS
score, the company has consistently been asked to do more in
adjacent segments of its workflow. With this combination,
Clearwater’s clients in the insurance, asset management, and asset
allocator sectors—including corporations, governments, pensions,
endowments, foundations and REITs— will, in due course, benefit
from seamlessly integrating Enfusion’s IBOR and its portfolio and
order management software with the Clearwater platform. We expect
this to accelerate Clearwater’s journey from 1 basis point to 4
basis points (bps) journey and improve net revenue retention.
Increased TAM and Hedge Fund Leadership: The acquisition
positions Clearwater to expand into the hedge fund industry.
Enfusion has an outstanding track record and wide acceptance as the
leading end-to-end platform for hedge funds and more broadly,
liquid alternatives. By adding dedicated engineering, product, and
client operations teams, Clearwater aims to accelerate growth and
drive greater innovation within the industry. This expansion is
expected to increase the company’s TAM by $1.9 billion.
Global Growth Opportunities: The international markets
make up approximately 50% of Clearwater’s TAM but the company
derives less than 18% of its revenue from outside the U.S.
Enfusion’s strong international presence, with 38% of its revenue
generated in Europe and Asia, is expected to accelerate
Clearwater’s global adoption strategy. Having a significantly
higher presence across these geographies will strengthen
Clearwater’s ability to expand internationally.
Significant Synergy Opportunity: The combination presents
significant synergy opportunities across multiple fronts.
Clearwater believes it will help accelerate Enfusion’s growth based
on the increased right-to-win, back-to-base sales, greater presence
across geographies, and increased TAM.
Secondly, Clearwater has built a highly robust execution
infrastructure across New Delhi, Edinburgh and Boise that operates
effectively and at scale. Over the past few years, Clearwater’s
operating rigor and its ability to harness Generative AI has
allowed the company to aggressively improve gross margin while
improving customer satisfaction. Clearwater expects to bring those
skills to Enfusion and has very high confidence of driving
meaningfully improved unit economics, while also growing their
emerging managed services business.
And thirdly, Clearwater expects considerable efficiencies in
general and administrative expenses, yielding about $20 million in
cost savings, which we believe will be delivered over the first two
and a half years after close. In the Enfusion business
specifically, Clearwater expects to deliver 400 bps in Adjusted
EBITDA margin expansion in the first year after close and an
additional 400 bps in the second year after close.
”This transaction marks an exciting new chapter for all of
Enfusion’s key stakeholders. Since our inception, we have proven
that the versatility, scale, and depth of our solutions captures
the hearts and minds of both traditional and alternative investment
managers. Together with Clearwater, our shared passion for building
innovative technologies and enriching every aspect of the client
journey will now accelerate and enhance our combined ability to
support our clients’ evolving needs–whether they are expanding into
new strategies, asset classes, or geographies. That commitment will
ensure our clients remain on the cutting edge of investment
management technology,” said Oleg Movchan, CEO of Enfusion.
Michael Spellacy, Chair of the Enfusion Board and a member of
the Enfusion Special Committee, said, “Our agreement with
Clearwater represents the culmination of a comprehensive process to
determine the best path to maximizing value for all Enfusion
shareholders. Our review of potential strategic alternatives for
Enfusion was led by a Special Committee composed of independent
directors and advised by independent legal and financial advisors.
We are pleased to have reached an agreement that will both deliver
significant and immediate value to Enfusion’s shareholders, and,
together with Clearwater, provide our shareholders and employees
with the opportunity to participate in meaningful potential
upside.”
The merger agreement has been unanimously approved by a Special
Committee of the Board of Directors of Enfusion, consisting of
directors independent of Enfusion’s TRA holders, as well as by the
Boards of Directors of both companies. Certain shareholders of
Enfusion affiliated with FTV, ICONIQ and Mr. Movchan, collectively
holding approximately 45% of Enfusion’s total voting power, have
entered into voting and support agreements in favor of the
transaction. The transaction is anticipated to close in Q2 of 2025,
subject to approval by Enfusion shareholders, the receipt of
required regulatory approvals, and customary closing
conditions.
“Building on the momentum of our strong Q3 2024 results, we
continue to see strong business momentum in Q4, and we are
confident in our ability to meet and exceed the guidance provided
for the fourth quarter and full year 2024. This outstanding ARR
growth allows us to look ahead to 2025 with high confidence. These
achievements reflect the durability of our business model and our
disciplined approach to growth, which positions us to execute this
transformative acquisition effectively. With Enfusion, we are
taking a bold step forward, uniting two innovative platforms that
will redefine investment management, deliver meaningful
efficiencies, and expand our global reach,” said Jim Cox, CFO of
Clearwater Analytics.
Enfusion management expects preliminary full year 2024 revenue
of approximately $201-202 million, representing 15-16% year on year
growth, and preliminary Annual Recurring Revenue (ARR) as of
December 31, 2024, of approximately $210-211 million, representing
13-14% year on year growth.
Transaction Details
Under the terms of the merger agreement, Enfusion shareholders
will receive consideration equal to $11.25 per share consisting of
$5.85 per share in cash and $5.40 per share in Clearwater Class A
Common Stock. This represents a 13% premium over the January 10,
2025, closing price of Enfusion Stock and a 32% premium over the
undisturbed closing price of Enfusion Stock on September 19, 2024,
the last trading day prior to media rumors about a potential sale
of Enfusion.
The exchange ratio will be determined at close with reference to
a 10% collar around a Clearwater Class A Common Stock price of
$27.79. If the volume weighted average price of Clearwater Class A
Common Stock for the 10-trading day period ending on the second to
last trading day prior to the closing date (the “Final Parent Stock
Price”) is below $25.01, then Enfusion shareholders will receive
0.2159 shares of Clearwater Class A Common Stock per share of
Enfusion Stock. If the Final Parent Stock Price is above $30.57,
then Enfusion shareholders will receive 0.1766 shares of Clearwater
Class A Common Stock per share of Enfusion Class A Common Stock. If
the Final Parent Stock Price is greater than or equal to $25.01,
but less than or equal to $30.57, then Enfusion shareholders will
receive a number of shares of Clearwater Class A Common Stock
determined by dividing $5.40 by the Final Parent Stock Price.
Enfusion shareholders will be able to elect to receive the mixed
cash/stock consideration described above, or all-cash or all-stock
consideration, subject to proration to the extent cash or stock is
oversubscribed. Regardless of the mix elected, the value per share
will be equalized ahead of closing, such that the value of each
election choice will be substantially the same.
Clearwater is expected to pay a total of approximately $760
million in cash and issue between approximately 23 million and 28
million new shares to Enfusion shareholders.
In connection with the transaction, an additional $30 million
will be paid to retire Enfusion’s TRA. This payment represents an
approximately 78% reduction to the contractual early termination
obligation otherwise due under the TRA in connection with a change
of control, representing an approximately $105 million benefit to
Enfusion’s shareholders.
Clearwater has obtained committed financing to support the
transaction, which is expected to be funded, together with cash on
hand, with a $800 million Term Loan B to fund the transaction and
refinance certain existing debt. Clearwater has also secured
commitments for a $200 million revolving line of credit. Gross
leverage at closing is expected to be approximately 3.7 times
adjusted pro forma EBITDA.
Advisors
J.P. Morgan Securities LLC is serving as financial advisor to
Clearwater Analytics. Committed financing for the transaction has
been provided by JPMorgan Chase Bank, N.A. Kirkland & Ellis LLP
is serving as legal advisor to Clearwater Analytics. Goldman, Sachs
& Co. LLC is serving as exclusive financial advisor to
Enfusion’s Special Committee. Dechert LLP is serving as legal
advisor to Enfusion’s Special Committee, while Goodwin Procter LLP
is serving as legal advisor to Enfusion.
Conference Call and Webcast
Clearwater Analytics will host an investor conference call to
discuss the transaction on January 13, 2025, at 8:30 a.m.
ET. A live webcast of the call will be accessible via
Clearwater’s Investor Relations website at
investors.clearwateranalytics.com. A replay of the webcast will
also be available on Clearwater’s Investor Relations website
shortly after the call.
About Clearwater Analytics
Clearwater Analytics (NYSE: CWAN), a global, industry-leading
SaaS solution, automates the entire investment lifecycle. With a
single instance, multi-tenant architecture, Clearwater offers
award-winning investment portfolio planning, performance reporting,
data aggregation, reconciliation, accounting, compliance, risk, and
order management. Each day, leading insurers, asset managers,
corporations, and governments use Clearwater’s trusted data to
drive efficient, scalable investing on more than $7.3 trillion in
assets spanning traditional and alternative asset types. Additional
information about Clearwater can be found at
clearwateranalytics.com.
About Enfusion
Enfusion's investment management software-as-a-service platform
removes traditional information boundaries, uniting front-, middle-
and back-office teams on one system. Through its software,
analytics, and middle/back-office managed services, Enfusion
creates enterprise-wide cultures of real-time, data-driven
intelligence and collaboration boosting agility and powering
growth. Enfusion partners with over 850 investment managers from 9
global offices spanning four continents. For more information,
please visit www.enfusion.com.
Enfusion’s ARR
Enfusion calculates Annual Recurring Revenue (ARR) by
annualizing platform subscriptions and managed services revenues
recognized in the last month of the measurement period. Enfusion
believes ARR provides important information about its future
revenue potential, its ability to acquire new clients and its
ability to maintain and expand its relationship with existing
clients. ARR is included in a set of metrics Enfusion calculates
monthly to review with management as well as periodically with its
board of directors.
Forward-Looking Statements
This press release contains “forward-looking statements” within
the meaning of the safe harbor provisions of the Private Securities
Litigation Reform Act of 1995. These forward-looking statements are
based on the beliefs and assumptions of Clearwater’s and Enfusion’s
management and on information currently available to them.
Forward-looking statements include information concerning the
following factors in reference to Clearwater and/or Enfusion: the
timing of the consummation of the acquisition and the ability to
satisfy closing conditions, possible or assumed future results of
operations, possible or assumed performance, business strategies,
technology developments, financing and investment plans,
competitive position, industry, economic and regulatory
environment, potential growth opportunities and the effects of
competition. Forward-looking statements include statements that are
not historical facts and can be identified by terms such as
“anticipate,” “believe,” “could,” “estimate,” “expect,” “intend,”
“aim,” “may,” “plan,” “potential,” “predict,” “project,” “seek,”
“should,” “will,” “would” or similar expressions and the negatives
of those terms, but are not the exclusive means of identifying such
statements.
Forward-looking statements involve known and unknown risks,
uncertainties, and other factors, many of which are beyond
Clearwater’s and Enfusion’s control, that may cause their actual
results, performance, or achievements to be materially different
from any future results, performance or achievements expressed or
implied by the forward-looking statements. These risks and
uncertainties include, but are not limited to, the ability to
successfully close the acquisition, Clearwater's ability to
successfully integrate the operations and technology of Enfusion
with those of Clearwater, retain and incentivize the employees of
Enfusion following the close of the acquisition, retain Enfusion’s
clients, repay debt to be incurred in connection with the Enfusion
acquisition and meet financial covenants to be imposed in
connection with such debt, risks that cost savings, synergies and
growth from the acquisition may not be fully realized or may take
longer to realize than expected, the finalization and audit of
Enfusion’s 2024 fiscal year financial results which could
potentially result in changes or adjustments to the preliminary
financial results presented herein, as well as other risks and
uncertainties discussed under “Risk Factors” in Clearwater’s Annual
Report on Form 10-K for the year ended December 31, 2023 filed with
the US Securities and Exchange Commission (the “SEC”) on February
29, 2024 and in Enfusion’s Annual Report on Form 10-K for the year
ended December 31, 2023 filed with the SEC on March 12, 2024, as
well as in other periodic reports filed by Clearwater and Enfusion
with the SEC. These filings are available at www.sec.gov and on
Clearwater’s website, investors.clearwateranalytics.com, and
Enfusion’s website, ir.enfusion.com. Given these uncertainties, you
should not place undue reliance on forward-looking statements.
Also, forward-looking statements represent management’s beliefs and
assumptions only as of the date of this press release and should
not be relied upon as representing Clearwater’s or Enfusion’s
expectations or beliefs as of any date subsequent to the time they
are made. Each of Clearwater and Enfusion does not undertake to and
specifically declines any obligation to update any forward-looking
statements that may be made from time to time by or on behalf of
Clearwater or Enfusion.
Enfusion's financial results for and as of the year ended
December 31, 2024, presented in this press release are preliminary,
unaudited, and based on currently available information. Enfusion
has provided estimated ranges because financial closing procedures
for the quarter are not yet completed and final results may
therefore vary from these estimates. These preliminary estimates
have not been audited by Enfusion's independent registered public
accounting firm.
No Offer or Solicitation
This press release is not intended to and shall not constitute
an offer to buy or sell or the solicitation of an offer to buy or
sell any securities, or a solicitation of any vote or approval, nor
shall there be any sale of securities in any jurisdiction in which
such offer, solicitation or sale would be unlawful prior to
registration or qualification under the securities laws of any such
jurisdiction. No offer of securities shall be made except by means
of a prospectus meeting the requirements of Section 10 of the
Securities Act of 1933, as amended (the "Securities Act").
Additional Information and Where to Find It
In connection with the acquisition, Clearwater will file with
the SEC a Registration Statement on Form S-4 (the “Registration
Statement”) to register the shares of Clearwater's common stock to
be issued pursuant to the acquisition, which will include a
prospectus of Clearwater and a proxy statement of Enfusion (the
“proxy statement/prospectus”). Each of Clearwater and Enfusion may
also file other documents with the SEC regarding the acquisition.
This press release is not a substitute for the Registration
Statement, proxy statement/prospectus or any other document which
Clearwater or Enfusion may file with the SEC in connection with the
acquisition. BEFORE MAKING ANY VOTING DECISION, INVESTORS AND
SECURITY HOLDERS ARE URGED TO READ THE REGISTRATION STATEMENT,
PROXY STATEMENT/PROSPECTUS AND ANY OTHER RELEVANT DOCUMENTS THAT
MAY BE FILED WITH THE SEC, AS WELL AS ANY AMENDMENTS OR SUPPLEMENTS
TO THESE DOCUMENTS, CAREFULLY AND IN THEIR ENTIRETY IF AND WHEN
THEY BECOME AVAILABLE BECAUSE THEY CONTAIN OR WILL CONTAIN
IMPORTANT INFORMATION ABOUT THE TRANSACTION, THE RISKS RELATED
THERETO, AND RELATED MATTERS. After the Registration Statement has
been declared effective, the definitive proxy statement/prospectus
(if and when available) will be mailed to Enfusion's security
holders. Investors and security holders will be able to obtain free
copies of the Registration Statement and proxy
statement/prospectus, as each may be amended or supplemented from
time to time, and other relevant documents filed by Clearwater and
Enfusion with the SEC (if and when available) through the website
maintained by the SEC at www.sec.gov. Copies of documents filed
with the SEC by Clearwater, including the proxy
statement/prospectus (when available) will be available free of
charge from Clearwater's website at
investors.clearwateranalytics.com/overview. Copies of documents
filed with the SEC by Enfusion, including the proxy
statement/prospectus (when available) will be available free of
charge from Enfusion's website at ir.enfusion.com.
Participants in the Solicitation
Clearwater, Enfusion and certain of their respective directors
and executive officers may be deemed to be participants in the
solicitation of proxies in respect of the Transaction. Information
about Clearwater's directors and executive officers is available in
Clearwater's Annual Report on Form 10-K for the year ended December
31, 2023 filed with the SEC on February 29, 2024, its definitive
proxy statement for its 2024 annual meeting of stockholders, which
was filed with the SEC on April 29, 2024, and in the proxy
statement/prospectus (when available). Information about the
directors and executive officers of Enfusion is available in its
Annual Report on Form 10-K for the year ended December 31, 2023
filed with the SEC on March 12, 2024, its definitive proxy
statement for its 2024 annual meeting of stockholders, which was
filed with the SEC on April 26, 2024, and in the proxy
statement/prospectus (when available). Other information regarding
the participants in the solicitations and a description of their
direct and indirect interests, by security holdings or otherwise,
will be contained in the Registration Statement, the proxy
statement/prospectus and other relevant materials to be filed with
the SEC regarding the Transaction when they become available.
Investors should read the proxy statement/prospectus carefully when
it becomes available before making any voting or investment
decisions. Copies of the documents filed with the SEC by Clearwater
and Enfusion will be available free of charge through the website
maintained by the SEC at www.sec.gov. Additionally, copies of
documents filed with the SEC by Clearwater, including the proxy
statement/prospectus (when available) will be available free of
charge from Clearwater's website at
investors.clearwateranalytics.com/overview and copies of documents
filed with the SEC by Enfusion, including the proxy
statement/prospectus (when available) will be available free of
charge from Enfusion's website at ir.enfusion.com.
View source
version on businesswire.com: https://www.businesswire.com/news/home/20250113430675/en/
Investor Contact for Clearwater Analytics Joon Park | +1
415-906-9242 | investors@clearwateranalytics.com
Investor Contact for Enfusion Bill Wright |
investors@enfusion.com
Media Contact for Clearwater Analytics Claudia Cahill |
+1 703-728-1221 | press@clearwateranalytics.com
Media Contact for Enfusion Mollie Applegate |
media@enfusion.com
Enfusion (NYSE:ENFN)
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Enfusion (NYSE:ENFN)
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