Capitolis raises $220M to add securities lending to its bank platform

Capitolis has raised $220 million to expand a platform that helps banks and institutional investors manage capital, funding and trading-book constraints. The package combines a $120 million Series E with $100 million of debt and values the company at $1.9 billion. Citi led the equity round, while First Citizens Innovation Banking, Hercules Capital and Pinegrove Venture Partners are providing the debt.

This isn’t one $220 million venture round. It is acquisition financing with two layers: new equity and borrowing. Founder and CEO Gil Mandelzis told CTech that most of the money is allocated to Capitolis’ pending $200 million all-cash purchase of eSecLending, which was announced September 29 and still requires regulatory and antitrust approvals.

Capitolis’ existing business has two main pieces. Its Capital Marketplace connects banks seeking capital or funding with institutional investors looking for financing opportunities, helping financial institutions support more business while managing risk and funding. Its Portfolio Optimization tools work on derivatives positions across foreign exchange, credit and interest rates, using bilateral or multilateral exercises, novations and trade tear-ups to reduce counterparty exposure, margin needs and regulatory-capital costs.

eSecLending adds a different workflow: pension funds, insurers and asset managers make securities available for lending to global banks. The business supports those asset owners’ securities-financing transactions. That would bring a new customer group onto Capitolis’ platform and put securities lending alongside its repo, financing and derivatives-optimization services.

Tradeweb corporate-development head Serene Murphy said the combination could bring more automation and efficiency to a market that has historically relied on manual processes. If the deal closes, it would also widen Capitolis’ customer network: eSecLending brings relationships with institutional asset owners and an ecosystem spanning major banks and prime brokers. The transaction excludes eSecLending (Europe) Limited, which will continue providing services to the acquired business.

The Series E’s $1.9 billion valuation is $300 million, or about 19%, above Capitolis’ $1.6 billion valuation in its 2022 round, according to CTech. New investors Bank of America, Nomura and Tradeweb join existing backers including Citi, Barclays, BNP Paribas, J.P. Morgan, State Street and UBS.