The equity round was led by Citi, an existing investor. New strategic investors joining the cap table include Bank of America, Nomura and Tradeweb Markets. Existing investors Barclays, BNP Paribas, J.P. Morgan, State Street and UBS also participated. The debt portion is being provided by First Citizens Innovation Banking (formerly Silicon Valley Bank), Hercules Capital and Pinegrove Venture Partners.

The rationale for the eSecLending acquisition sits squarely in Capitolis’ core pitch: reducing the capital and balance sheet burden on the large bank-dealers it counts as both investors and clients. Capitolis already operates a Capital Marketplace and a Portfolio Optimization business, both of which aim to help financial institutions net down exposures, redeploy collateral and free up regulatory capital. Adding securities lending extends that logic into a market that has historically been operationally intensive and, as Serene Murphy, global head of corporate development at Tradeweb, noted in the announcement, reliant 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,” Murphy said. “By combining eSecLending’s network of institutional asset owners with Capitolis’ financial resource optimisation platform, this deal creates real opportunities to bring more automation and efficiency to a market that has historically relied on manual processes.”

The strategic significance of eSecLending’s institutional asset owner network is also material. Securities lending programmes are a significant source of incremental return for large pension funds, sovereign wealth funds and asset managers; access to that network gives Capitolis a distribution channel that complements its existing bank-dealer relationships.

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