Financial technology company Capitolis has agreed to acquire independent securities lending business eSecLending for $200 million in cash, expanding its services and its relationships with major institutional investors.
The agreement, announced on 29 September, will add securities lending capabilities to Capitolis’ existing financial resource management platform. It will also extend the company’s client network to include more pension funds, insurance companies and asset managers.
Completion remains subject to customary closing conditions, including required regulatory approvals and antitrust clearance. The deal represents Capitolis’ fourth strategic acquisition in five years.
Securities lending allows asset owners to lend shares, bonds and other securities to borrowers, typically financial institutions, in return for a fee. Over its 26-year history, eSecLending has developed relationships with institutional investors, major global banks and prime brokers, supporting clients’ securities financing transactions.
Capitolis said the acquisition would complement its existing services, which help financial institutions manage capital and other resources more efficiently. The combined business aims to provide a broader range of capabilities across securities lending, repurchase agreements — commonly known as repo — and financing markets.
The companies already have experience working together on new market solutions.
“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 offers access to Capitolis’ technology platform and wider network of financial institutions.
“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.”
Capitolis described the acquisition as a further step in broadening its business alongside organic growth.
“This is a transformational acquisition for Capitolis,” said Gil Mandelzis, CEO 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.”
Under the agreement, Capitolis will acquire eSecLending from Parthenon Capital and the company’s management team. Parthenon Capital will also invest in Capitolis as part of the transaction.
eSecLending (Europe) Limited is excluded from the acquisition and will continue to provide services to eSecLending.
Capitolis is backed by venture capital investors and a number of major banks, including Barclays, BNP Paribas, Citi, J.P. Morgan, Morgan Stanley, Standard Chartered, State Street and UBS.
FT Partners acted as Capitolis’ exclusive strategic and financial adviser, with WilmerHale providing legal advice. Berenson & Company and Raymond James advised eSecLending financially, while Troutman Pepper Locke LLP and Debevoise & Plimpton LLP served as its legal advisers.
