Form 4: WCAS Entities Distribute Clearwater Analytics Holdings Shares in Pro Rata Transaction

WCAS XIII Associates LLC distributed shares of Clearwater Analytics Holdings to its members in a pro rata transaction.

Summary

• WCAS XIII Associates LLC distributed shares of Clearwater Analytics Holdings, Inc. Class D and Class C common stock to its members.
• The distribution was pro rata and for no consideration.
• The transaction involved 364,447 shares of Class D Common Stock and 518,652 shares of Class C Common Stock.
• Following the transaction, WCAS XIII Carbon Analytics Acquisition, L.P. indirectly owns 8,171,526 shares of Class D Common Stock and 10,786,830 shares of Class C Common Stock.
• The shares of Class C Common Stock do not represent economic interests in the Issuer but have 10 votes per share.
• The shares of Class D Common Stock will convert to Class A Common Stock and Class C Common Stock will convert to Class B Common Stock upon certain conditions.

Sentiment

Score: 7

Explanation: The document reflects a standard corporate action, with no significant positive or negative implications. The sentiment is neutral to slightly positive due to the distribution of shares to members.

Positives

• The pro rata distribution allows members of WCAS XIII Associates LLC to directly hold shares in Clearwater Analytics Holdings.
• The conversion of Class D and Class C shares to Class A and Class B shares respectively, will simplify the share structure in the future.

Risks

• The conversion of Class D and Class C shares is dependent on future events, which may not occur as expected.
• The voting power of Class C shares could potentially influence the company's direction.

Future Outlook

The document does not contain any specific forward-looking statements or guidance.

Management Comments

• The general partner of WCAS XIII Carbon Analytics Acquisition, L.P. and WCAS XIII Carbon Investors, L.P. and the managing member of WCAS GP CW LLC is WCAS XIII Associates LLC.
• Investment and voting decisions with respect to the shares held by the WCAS Entities are made by a committee.
• All members of such committee disclaim beneficial ownership of the shares.

Industry Context

This transaction is a common practice for private equity firms to distribute shares to their members after an investment period. It is a standard part of the lifecycle of private equity investments.

Comparison to Industry Standards

• Pro rata distributions are a standard method for private equity firms to distribute assets to their limited partners.
• The conversion of different classes of shares is a common mechanism to simplify capital structures after an IPO, similar to other companies that have gone public with multiple share classes.
• The disclaimer of beneficial ownership by the committee members is a standard practice to avoid potential conflicts of interest.

Stakeholder Impact

• The distribution of shares may increase the number of direct shareholders of Clearwater Analytics Holdings.
• The conversion of share classes will eventually simplify the company's capital structure.

Next Steps

• The conversion of Class D and Class C shares to Class A and Class B shares will occur upon the earlier of (i) the date that affiliates of Welsh Carson own less than 5% of the Issuer's common stock and (ii) the seventh anniversary of the closing of the Issuer's initial public offering.

Key Dates

Keywords

Clearwater Analytics Holdings, WCAS XIII, share distribution, pro rata, Class D Common Stock, Class C Common Stock, beneficial ownership, conversion