By Arasu Kannagi Basil and Niket Nishant
(Reuters) -Clearwater Analytics has agreed to acquire Enfusion in a $1.5 billion cash-and-stock deal as the financial software maker looks to bolster its international presence and enter the hedge fund industry.
Enfusion shareholders will receive $5.85 in cash and $5.40 in Clearwater stock for each share, valuing the Chicago-based firm at $11.25 per share, the companies said on Monday. Enfusion shares closed nearly 9% higher.
The deal highlights the appeal of mergers among companies that offer complementary services and shows how they can gain market share through strategic alliances.
"Everything that we do is after the trade. And what Enfusion is focused on is everything before the trade. We are very, very complementary," said Clearwater CEO Sandeep Sahai.
"Our clients need order management systems and portfolio management systems. We could build it, but it'd have taken us a long time to do it."
Enfusion, primarily serving hedge funds, provides portfolio management and risk systems to investment funds, and expects a revenue of $201 million to $202 million in 2024.
Clearwater is offering a 32% premium to Enfusion stock's close on Sep. 19 when Reuters had exclusively reported that it was exploring options including a sale after receiving takeover interest from potential suitors, including private equity firms.
The company had also fielded acquisition interest in 2023 from several potential acquirers, including Francisco Partners, Vista Equity Partners and Irenic Capital Management.
Certain shareholders affiliated with investment firms FTV Management Company and ICONIQ Growth and Enfusion CEO Oleg Movchan, who collectively hold about 45% of voting power, have agreed to support the deal.
J.P. Morgan Securities and Kirkland & Ellis advised Clearwater Analytics, while Goldman Sachs and Dechert advised Enfusion's special committee. Goodwin Procter advised Enfusion.
The deal is expected to close in the second quarter of 2025.