Form 4: WCAS XIII Entities Reduce Stake in Clearwater Analytics Holdings Through Class C Stock Sale

WCAS XIII entities sold 15,539,445 shares of Class C Common Stock in Clearwater Analytics Holdings at $29.11 per share, while maintaining significant indirect ownership through various holdings.

Summary

• WCAS XIII Carbon Analytics Acquisition, L.P. and related entities have reported a transaction involving the sale of 15,539,445 shares of Class C Common Stock of Clearwater Analytics Holdings, Inc. at a price of $29.11 per share.
• The transaction occurred on November 13, 2024.
• The sale resulted in a decrease in direct holdings of Class C Common Stock to zero, but the entities maintain indirect ownership through LLC Interests and other holdings.
• The entities also hold Class D Common Stock and Class A Common Stock indirectly.
• The Class C Common Stock does not represent economic interests in the Issuer but carries 10 votes per share.
• The entities can exchange their LLC Interests for Class A or Class D Common Stock, or at the Issuer's election, receive a cash payment based on the 20-day volume weighted average price of Class A Common Stock.

Sentiment

Score: 5

Explanation: The document reflects a standard transaction of a major shareholder reducing their stake, which is neither particularly positive nor negative. The sale price is a negotiated price with the underwriter.

Risks

• The underwriter may offer the shares of Class A Common Stock from time to time in one or more transactions on the NYSE, in the over-the-counter market or through negotiated transactions at market prices or at negotiated prices, which could impact the share price.
• The conversion of Class D and Class C shares to Class A and Class B shares respectively, upon certain conditions, could impact the voting structure and ownership.

Future Outlook

The document does not contain specific forward-looking statements, but it outlines the potential for future exchanges of LLC Interests for Class A or Class D Common Stock or cash payments.

Industry Context

This transaction reflects a significant ownership change by a major shareholder in Clearwater Analytics Holdings, which is a common occurrence in the financial technology sector. Such transactions can influence investor sentiment and market dynamics.

Comparison to Industry Standards

• Sales of large blocks of shares by major shareholders are not uncommon in the tech and financial sectors, similar to transactions seen with other private equity backed companies post IPO.
• The price of $29.11 per share is a negotiated price with the underwriter, which is a common practice in large block trades.
• The structure of multiple classes of stock with different voting rights is also a common practice in companies with significant private equity backing, similar to companies like Google (Alphabet) and Facebook (Meta).

Stakeholder Impact

• The sale of shares may have a short-term impact on the share price, potentially affecting shareholders.
• The transaction does not appear to have a direct impact on employees, customers, or suppliers.

Next Steps

• The underwriter may offer the shares of Class A Common Stock from time to time in one or more transactions.
• The Reporting Person may exchange all or a portion of such person's common units of CWAN Holdings, LLC for an equal number of newly issued shares of Class D Common Stock or Class A Common Stock from time to time, subject to customary adjustments, or, at the election of the Issuer, a cash payment.

Key Dates

Keywords

Clearwater Analytics Holdings, WCAS XIII, Class C Common Stock, Stock Sale, Beneficial Ownership, SEC Form 4, LLC Interests, Share Transaction