Clearwater Analytics Stock Surges on Reported Buyout Talks
Private equity firms Warburg Pincus and Permira, which previously owned the fintech, are said to be in discussions for a take-private deal.
Shares of Clearwater Analytics Holdings Inc. (NYSE: CWAN) surged more than 19% in after-hours trading Friday following reports that the financial technology firm is in acquisition talks with private equity giants Warburg Pincus and Permira.
The Boise, Idaho-based company, which provides a cloud-native platform for investment accounting and analytics, finished the regular trading session up 0.9% at $19.25. The subsequent after-hours jump added nearly a billion dollars to its market capitalization, pushing it toward $6.7 billion.
The potential deal marks a return for two of the company's most prominent previous backers. Both Warburg Pincus and Permira were instrumental in Clearwater's growth, having invested in the company in 2020 before taking it public in a successful 2021 initial public offering. People familiar with the matter indicated a transaction could be finalized within weeks, though discussions remain ongoing and could end without a deal, according to a report from Bloomberg.
Representatives for Clearwater Analytics, Warburg Pincus, and Permira have not yet publicly commented on the speculation.
Clearwater Analytics offers a software-as-a-service (SaaS) platform that automates data aggregation, accounting, and reporting for more than $7.3 trillion in assets for insurers, asset managers, and corporations. The company's strong performance has made it an attractive target, with recent quarterly results showing revenue growth of 77% year-over-year.
The move comes amid a broader, anticipated rebound in the fintech mergers and acquisitions market. After a slowdown, industry analysts expect a pickup in consolidation in 2025, driven by a focus on profitability and the integration of new technologies like artificial intelligence. Clearwater's consistent recurring revenue model and established client base fit the profile of a desirable asset for private equity firms seeking stable cash flow and growth potential.
Before the acquisition news broke, Wall Street was already optimistic about Clearwater's prospects. The company holds a strong consensus rating from analysts, with 12 'Buy' or 'Strong Buy' ratings and an average price target of $28.55, suggesting significant upside from its Friday closing price. The potential take-private offer would likely need to approach or exceed this valuation to satisfy shareholders.
The company has reportedly been exploring strategic options, including a potential sale, after receiving takeover interest from multiple parties. The familiarity of Warburg Pincus and Permira with the business operations could provide a smoother path to a potential transaction.
Investors will be closely watching for any official announcements from the involved parties. A successful take-private deal would represent a significant bet on the continued growth of automated investment management solutions and could signal a heating up of M&A activity across the financial technology landscape.