Clearwater Analytics’ share price surged nearly 8% in premarket trading on Monday after the company agreed to an $8.4 billion take-private deal led by private equity firms Permira and Warburg Pincus.
Under the terms of the transaction, Clearwater shareholders will receive $24.55 per share in cash, representing a premium of about 47% to the company’s closing price on November 10, the last trading day before reports emerged of a possible deal.
The offer underscores growing private equity interest in software companies whose valuations have lagged public market expectations.
Clearwater said on Sunday that its board of directors had approved the transaction following a recommendation from a special committee of independent directors.
The committee was advised by external legal counsel and a financial advisor, both of whom supported the deal.
The transaction remains subject to shareholder and regulatory approvals. If those conditions are met, Clearwater expects the deal to close in the first half of 2026.
The company said it would continue to operate as usual while the process is underway.
The investor group also includes Singapore-based fund Temasek, adding a long-term institutional backer to the deal alongside the two private equity firms.
Management sees room for faster growth
Chief executive Sandeep Sahai described the agreement as a positive outcome for both the company and its shareholders, saying it would give Clearwater greater flexibility to pursue its long-term strategy.
He said operating as a private company would allow Clearwater to invest more aggressively as it integrates its platforms to build a next-generation, front-to-back investment management solution.
That platform is intended to better address alternative assets, enhance risk analytics and expand the use of agentic, AI-powered tools based on Clearwater’s proprietary data.
Sahai said Permira and Warburg Pincus bring experience in scaling technology businesses and would support the company’s next phase of growth.
Warburg Pincus managing director Alex Stratoudakis said the firm was backing Clearwater’s vision of creating an open, modular platform for institutional investment management.
A business built on cloud-based analytics
Based in Boise, Idaho, Clearwater provides cloud-based software that helps companies manage investment portfolios by aggregating data and performing accounting and analytics in a single system.
The company operates a multi-tenant platform that allows clients to integrate complex analytics and generate more precise, on-demand insights.
Clearwater went public in 2021 at a valuation of about $5.5 billion.
As of Sunday, its market capitalisation stood at roughly $6.5 billion, according to LSEG data.
At the end of 2024, the company served firms managing $8.8 trillion in assets under management.
Private equity returns to a familiar name
Permira and Warburg Pincus are not new to Clearwater. Both firms were majority owners at the time of their initial public offering and gradually reduced their stakes in the years that followed by selling various share classes.
People familiar with the matter told Reuters last month that the two firms had submitted a joint bid for Clearwater, roughly four years after taking the company public.
The renewed interest comes amid a broader trend of private equity firms targeting listed software companies they believe are undervalued.
The deal was announced shortly after activist investor Starboard Value disclosed a nearly 5% stake in Clearwater, arguing that the company was undervalued amid investor concerns over the integration of recent acquisitions, including Enfusion, Beacon and Bistro.
Valuation debate among analysts
Not all market participants are convinced the offer fully reflects Clearwater’s potential.
Analysts at RBC Capital Markets said the bid undervalues the company, pointing to its scale and long-term growth prospects.
They noted that investors have been wary of slowing organic growth and the pace of mergers and acquisitions completed in a short period of time, factors that have weighed on the stock.
The take-private offer may give Clearwater time away from public market pressure to work through those challenges.
PJT Partners is acting as exclusive financial adviser to Clearwater’s special board committee, with Cravath, Swaine & Moore serving as legal counsel.
JP Morgan is advising Clearwater, while Kirkland & Ellis is legal counsel to the investor group.
The deal adds to a busy period for both Permira and Warburg Pincus.
In recent months, Permira agreed to sell Boats Group to General Atlantic and CPP Investments, while Warburg Pincus led a group acquiring ECN Capital Corp in a transaction valued at about C$1.9 billion, including debt.
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