Capitolis buys eSecLending in USD $200 million deal

Capitolis has agreed to acquire eSecLending for USD $200 million in an all-cash deal, adding a securities lending business to its platform.

The transaction brings together Capitolis, a financial technology company focused on financial resource management, and eSecLending, an independent securities lending firm that works with large institutional asset owners, including pension funds, insurers and asset managers.

eSecLending lends securities to major global banks and has built its business over 26 years. The acquisition would expand Capitolis into securities lending alongside its existing activities in resource optimisation, repo and financing markets.

The sellers are Parthenon Capital and eSecLending's management team. Under the deal, Parthenon Capital will also invest in Capitolis.

The acquisition remains subject to customary closing conditions, including regulatory approvals and antitrust clearance. eSecLending (Europe) Limited is not part of the transaction, though it will continue to provide services to eSecLending.

The purchase is Capitolis' fourth strategic acquisition in five years and extends its client reach to eSecLending's network of institutional asset owners.

Strategic fit

Capitolis and eSecLending have already worked together to bring products to market, giving them an established relationship ahead of the takeover.

"We've known the eSecLending team for years and have already been partnering to introduce new solutions to the market," said Okan Pekin, President of Capitolis. "We've seen firsthand the strength of their client relationships, the quality of their business, and the deep expertise of their team. Bringing eSecLending and Capitolis together expands our network and enhances our offering with securities lending capabilities that naturally complement our existing set of solutions."

For eSecLending, the agreement marks a change in ownership after years of operating as an independent securities financing specialist.

"We are incredibly proud of what we've built at eSecLending and grateful to the team, clients, and partners who have been part of that journey," said Craig Starble, Chief Executive Officer of eSecLending. "Capitolis is an exceptional company with global reach, a strong commitment to innovation, and deep relationships with many of the world's leading financial institutions. Joining them enables us to expand the solutions we bring to market and deliver even greater value to our clients."

Growth plans

The deal comes as Capitolis continues to grow organically across its existing business lines. Founded in 2017, the company counts venture capital firms and global banks among its backers.

Its investors include Canapi Ventures, 9Yards Capital, SVB Capital, Andreessen Horowitz, Index Ventures, Sequoia Capital, Spark Capital and S Capital, as well as banks including Barclays, BNP Paribas, Citi, J.P. Morgan, Morgan Stanley, Standard Chartered, State Street and UBS.

eSecLending focuses on securities lending and collateral management for institutional investors, offering an alternative to traditional pooled lending programmes. Its network includes major banks and prime brokers involved in securities financing transactions.

Gil Mandelzis, Chief Executive Officer and Founder of Capitolis, described the acquisition as part of a broader expansion of the company's business lines.

"This is a transformational acquisition for Capitolis," said Gil Mandelzis, Chief Executive Officer and Founder of Capitolis. "We have been enjoying exceptional organic growth over the past few years across our existing business lines, and eSecLending adds a highly complementary new business that aligns closely with our clients' evolving needs. We are thrilled to welcome Craig, the eSecLending team, and their clients to the Capitolis network as we broaden our offering and accelerate our growth."

FT Partners advised Capitolis on strategy and finance for the transaction, while WilmerHale acted as legal adviser. Berenson & Company and Raymond James advised eSecLending, with Troutman Pepper Locke and Debevoise & Plimpton providing legal advice.