Form 4: Accel India III and Accel Growth FII Distribute Freshworks Shares to Partners

Accel India III (Mauritius) Ltd. and Accel Growth FII (Mauritius) Ltd., both significant shareholders of Freshworks Inc., distributed a total of 2,500,000 Class A common shares to their respective partners on September 4, 2024.

Summary

• Accel India III (Mauritius) Ltd. and Accel Growth FII (Mauritius) Ltd., both entities related to Accel, reported changes in their beneficial ownership of Freshworks Inc. shares.
• On September 4, 2024, each entity distributed 1,250,000 shares of Class A common stock to their respective partners, representing each partner's pro rata interest.
• The distributions were made for no consideration and in accordance with exemptions under Rules 16a-13 and 16a-9 of the Securities Exchange Act of 1934.
• Following the transactions, both entities still hold significant amounts of Class B Common Stock, which can be converted into Class A Common Stock.
• The reporting persons are directors of Accel India III (Mauritius) Ltd. and Accel Growth FII (Mauritius) Ltd. and collectively make investment and voting decisions.

Sentiment

Score: 6

Explanation: The document itself is neutral, simply reporting a distribution of shares. It's a standard practice, but the impact on the stock price is uncertain. The distribution could increase the float and potentially lead to some selling pressure, but it doesn't inherently signal a negative outlook.

Industry Context

Venture capital firms and investment funds frequently distribute shares to their limited partners as part of their fund lifecycle. This is a common practice and doesn't necessarily indicate a negative outlook on the underlying company.

Comparison to Industry Standards

• Distribution of shares to partners is a standard practice among venture capital and private equity firms.
• Similar distributions can be seen with other companies backed by venture firms like Sequoia Capital, Andreessen Horowitz, and Tiger Global Management, as they mature and provide returns to their investors.
• The pro rata distribution ensures that partners receive their fair share of the investment's returns, aligning with standard limited partnership agreements.

Stakeholder Impact

• The distribution of shares could potentially increase the trading volume of Freshworks stock.
• Partners receiving the shares may choose to sell them, which could create some selling pressure on the stock price.
• The distribution allows the partners of Accel India III and Accel Growth FII to realize returns on their investment in Freshworks.

Key Dates