Financial technology company Capitolis has raised 220 million dollars in new financing, including a $120 million dollars equity round that values the company at $1.9 billion dollars, as it prepares to expand into the securities lending market through its acquisition of eSecLending.
The Series E round was led by Citi, already an investor in Capitolis, with Bank of America, Nomura and Tradeweb Markets joining as new strategic investors. Barclays, BNP Paribas, J.P. Morgan, State Street and UBS also participated, alongside other financial investors.
Capitolis founder and CEO Gil Mandelzis
(Photo: Capitolis)
The remainder of the financing comes in the form of debt provided by First Citizens Innovation Banking, Hercules Capital and Pinegrove Venture Partners.
The New York-based Capitolis develops technology designed to help banks and other financial institutions make more efficient use of their capital and balance sheets. Its business includes a marketplace connecting institutions seeking capital with investors as well as technology that allows banks to restructure or reduce financial exposures that can tie up capital.
The latest financing is closely tied to Capitolis' planned acquisition of eSecLending, a Boston-based securities lending company. Capitolis announced the 200 million dollars all-cash deal earlier this year.
Securities lending, in which institutional investors temporarily lend stocks and other securities to financial institutions in return for a fee, is an important but relatively little-known part of global financial markets. The acquisition would give Capitolis access to eSecLending's network of large institutional asset owners while adding securities lending to its existing financial resource management business.
The deal also represents a push by Capitolis into a market that financial technology companies and trading platforms see as ripe for greater automation.
"Securities lending represents the next frontier in the electronification we've seen across our markets," said Serene Murphy, global head of corporate development at Tradeweb. She said combining eSecLending's institutional network with Capitolis' technology could bring more automation and efficiency to a market that has traditionally relied heavily on manual processes.
Citi's Siris Singh, global head of markets strategic investments, said the bank's decision to lead the financing reflected its interest in companies involved in the changing infrastructure of global capital markets.
Capitolis founder and CEO Gil Mandelzis said the financing would allow the company to complete the eSecLending acquisition and broaden both its capabilities and client base.
"We are deeply grateful for the continued support of our existing strategic investors and excited to welcome Bank of America, Nomura and Tradeweb as new strategic investors," Mandelzis said.
The round brings together several of the world's largest banks as shareholders in a company whose technology is increasingly aimed at solving a problem those same institutions face: how to make better use of capital that would otherwise be tied up by regulatory requirements and trading exposures.
Capitolis' existing backers include Andreessen Horowitz, Index Ventures, Sequoia Capital, Spark Capital and several major global banks and financial institutions.
FT Partners advised Capitolis on the financing. WilmerHale served as the company's legal adviser, while Goodwin Procter advised the banks.