Capitolis has secured $220 million in equity and debt financing to support its planned acquisition of securities-lending provider eSecLending.
The financing comprises a $120 million Series E round valuing Capitolis at $1.9 billion and approximately $100 million of debt. CEO Gil Mandelzis said most of the new capital would support the acquisition, although the company did not provide an exact allocation.
Securities Lending Expands the Platform
Capitolis agreed on September 29 to acquire eSecLending from Parthenon Capital and the company’s management for $200 million in cash. Parthenon will reinvest in Capitolis as part of the transaction. The acquisition remains subject to regulatory approvals.
eSecLending (Europe) Limited is not included in the transaction but will continue providing services to the acquired business.
Capitolis currently helps banks and other financial institutions manage funding, capital and balance-sheet constraints through its Capital Marketplace and Portfolio Optimisation businesses. eSecLending would add securities-lending and collateral-management capabilities.
The deal would become Capitolis’ fourth strategic acquisition in five years. Its other recent transactions include the planned $46 million acquisition of Capitalab from BGC Group, adding technology for compressing interest-rate derivatives and optimising margin requirements.
Citi Leads Round as Strategic Investors Join
Existing investor Citi led the equity financing, with Bank of America, Nomura and Tradeweb Markets joining as new strategic backers. First Citizens Innovation Banking, Hercules Capital and Pinegrove Venture Partners are providing the debt.
Tradeweb’s participation also connects the funding round with the planned move into securities lending. Serene Murphy, Tradeweb’s Global Head of Corporate Development, said the combination could introduce more automation into a market that has historically relied on manual processes.
“Securities lending represents the next frontier in the electronification we’ve seen across our markets, and Capitolis’ acquisition of eSecLending will be an important step in that evolution," he added.
The new valuation is approximately 19% above the $1.6 billion assigned to Capitolis in its 2022 Series D round, although differences in the terms and investor rights limit a direct comparison.
If completed, the acquisition would place securities lending alongside Capitolis’ existing capital and portfolio-optimisation services. The next test is whether the combined platform can automate more of the workflow between institutional asset owners and the banks that borrow their securities.
This article was written by Tanya Chepkova at www.financemagnates.com.
Source: Finance Magnates
