8-K: Clearwater Analytics to Acquire Wilshire's Risk and Performance Analytics Business

Clearwater Analytics has announced a definitive agreement to acquire Wilshire's risk and performance analytics solutions, aiming to enhance its offerings for front and middle office clients.

Summary

• Clearwater Analytics has agreed to acquire Wilshire's risk and performance analytics solutions, including Wilshire Axiom, Wilshire Atlas, Wilshire Abacus, and Wilshire iQComposite.
• The acquisition aims to create a co-branded platform called Clearwater Wilshire Analytics, enhancing analytical capabilities for investment managers and institutional asset owners.
• The transaction is expected to close in the second quarter of 2024, subject to customary closing conditions.
• Clearwater expects to pay approximately $40 million for Wilshire's assets, which are anticipated to add about $7 million in annualized revenue.
• The combined platform will offer improved performance and risk attribution, security-level portfolio construction, and identification of investment opportunities.
• Wilshire will continue to focus on its core retirement and wealth, alternatives, and institutional business lines, while still having access to the analytics software.

Sentiment

Score: 8

Explanation: The document conveys a positive sentiment due to the strategic acquisition, expected revenue increase, and enhanced capabilities. The language used is optimistic and forward-looking.

Positives

• The acquisition will significantly enhance Clearwater's risk and performance capabilities.
• The combined platform will offer a more comprehensive solution for clients.
• The partnership is expected to expand Clearwater's reach into high-growth markets.
• Wilshire's industry-leading analytics have a long history of excellence and adoption from clients worldwide.
• The acquisition is expected to add approximately $7 million in annualized revenue.

Negatives

• The document does not explicitly mention any negatives.

Risks

• There are risks associated with integrating the operations and technology of the acquired assets.
• There is a risk of not retaining and incentivizing the employees related to the acquired assets.
• There is a risk of not retaining the clients to be acquired.
• The acquisition is subject to customary closing conditions, which may not be met.

Future Outlook

Clearwater expects to invest in building out a modern front-end, broaden coverage of asset classes, and enhance Wilshire's current offerings with the capabilities of its own platform. The combined platform is expected to help clients improve investment outcomes and reach new markets.

Management Comments

• Sandeep Sahai, CEO at Clearwater Analytics, stated that the acquisition marks a significant milestone and will supercharge clients' risk and performance capabilities.
• Andy Stewart, CEO at Wilshire, believes Clearwater is the ideal steward to expand the business and accelerate the growth of the analytic tools.
• Jason Schwarz, Deputy CEO at Wilshire, mentioned that the combined platform will improve investment outcomes for existing clients and reach new clients.

Industry Context

This acquisition reflects a trend in the financial technology sector where companies are consolidating to offer more comprehensive solutions. It also highlights the increasing importance of sophisticated risk and performance analytics for institutional investors.

Comparison to Industry Standards

• Wilshire is a well-established global financial services firm with a strong reputation in the institutional investment space, advising on over $1.3 trillion in assets and managing over $100 billion.
• Clearwater Analytics is a leading SaaS provider in investment management, with over $7.3 trillion in assets managed on its platform.
• The acquisition of Wilshire's analytics business positions Clearwater to compete more effectively with other major players in the investment management software space, such as BlackRock's Aladdin and Bloomberg's PORT.
• The combined platform aims to offer a more comprehensive solution than many existing offerings, potentially setting a new standard in the industry.

Stakeholder Impact

• Shareholders of Clearwater Analytics are likely to view the acquisition positively due to the potential for increased revenue and market share.
• Clients of both Clearwater and Wilshire are expected to benefit from the enhanced analytical capabilities of the combined platform.
• Employees of the acquired Wilshire analytics business will be integrated into Clearwater.
• The acquisition may impact competitors in the investment management software space.

Next Steps

• The transaction is expected to close in the second quarter of 2024.
• Clearwater will integrate the acquired assets and technology into its platform.
• Clearwater will invest in building out a modern front-end and broaden coverage of asset classes.
• The co-branded Clearwater Wilshire Analytics platform will be launched.

Key Dates

Keywords

acquisition, risk analytics, performance analytics, investment management, SaaS, Wilshire, Clearwater Analytics, institutional investors, asset owners, financial services