Capitolis, a technology provider for banks, completes $220 million in new financing, including $120 million in Series E equity, with a valuation of $1.9 billion
Capitolis completes financing with a valuation of $1.9 billion
Capitolis, a technology provider for banks, has completed $220 million in new financing, including $120 million in Series E equity, with a valuation of $1.9 billion. The previous round in 2022 had a valuation of $1.6 billion. The remainder is debt.
The equity round was led by existing shareholder Citi. New strategic investors include Bank of America, Nomura, and Tradeweb. Existing shareholders participating in the round include Barclays, BNP Paribas, JPMorgan, State Street, and UBS. The debt comes from First Citizens' Innovation Bank, Hercules Capital, and Pinegrove Venture Partners. First Citizens is taking over the business from the former Silicon Valley Bank.
The funds are primarily allocated for the recently announced acquisition of eSecLending. CEO Gil Mandelzis stated that most of the funds will go towards this acquisition, which is expected to contribute tens of millions of dollars in revenue as early as next year. The acquisition integrates securities lending into Capitolis's resource optimization platform and brings in institutional asset holders.
The company focuses on capital and balance sheet management for banks and institutions. Globes describes it as a co-renting arrangement among banks: spreading risk to cope with regulations post-2008 crisis. The development center is in Tel Aviv. Mandelzis previously served on the Foreign Exchange Committee of the New York Federal Reserve. Existing venture capital shareholders include a16z, Index, Sequoia, and Spark, while bank shareholders also include Morgan Stanley and Standard Chartered.
Siris Singh, Global Head of Market Strategy Investments at Citi, stated that this round brings strategic investors together to support Capitolis's next phase, investing in a company shaping global capital market infrastructure. Tradeweb is both a new shareholder and a peer in market infrastructure. The valuation increased from $1.6 billion to $1.9 billion, a rise of about 19% over four years, which is lower than the valuation cuts seen in most fintech companies during the same period.
This is a case of clients investing in their own infrastructure, rather than external growth funds pricing separately. Buyers are banks looking to reduce capital usage and consolidate securities lending onto the same platform, while sellers include existing shareholders accepting dilution and the party divesting eSecLending. Beneficiaries include Capitolis, which receives acquisition funds and bank distribution. The pressured parties are banks that still keep securities lending and balance optimization on internal platforms, as well as similar tech companies without bank shareholders.
Source: Public information
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Mandelzis is addressing the regulatory gaps post-crisis. After 2008, Basel rules required trading assets to be valued based on risk-weighted capital, prompting banks to reduce their usage of foreign exchange, swaps, and securities lending. Capitolis has created a network that allows this usage to be hedged and transferred among banks, making clients shareholders as well. The 2022 D round had a valuation of $1.6 billion, with investors including Citi, JPMorgan, and UBS. The 2026 E round adds Bank of America, Nomura, and Tradeweb to the same shareholder list.
The use of funds is outlined in the acquisition. Last week, the acquisition of eSecLending was announced, and Mandelzis mentioned that most of the new funds are allocated to it, which could contribute tens of millions of dollars in revenue next year. The equity is $120 million, and the debt is $100 million, sourced from First Citizens (the acquirer of the former Silicon Valley Bank), Hercules, and Pinegrove. The platform expands from optimizing existing balances to lending securities from institutional lenders to trading desks in need of inventory. Tradeweb's investment means that trading infrastructure and balance infrastructure are connected in the same round.
This can be contrasted with the post-2010 trend where banks outsourced clearing to LCH and foreign exchange trading to Tradeweb and Bloomberg, rather than each developing their own systems. On the other hand, since 2022, fintech valuations have been significantly cut on average, while Capitolis's valuation rose from $1.6 billion to $1.9 billion, showing limited growth but in the opposite direction. The industry position is to supplement categories rather than tell a growth story. Clients are already shareholders, and the acquisition connects securities lending revenue to the old network.
Structurally, this represents a reconstruction of the industry chain. Capital usage was previously priced based on each bank's own platform and regulatory model. Capitolis has turned this usage into a shareable network, allowing banks to retain this network in-house through equity. eSecLending addresses the institutional asset holder side. Pricing power remains with Basel rules, while the tech company charges for execution and network fees. Banks are both buyers and shareholders, and external funds have not separately inflated the valuation.
ABAB News · Cognitive Laws
Clients investing in their own infrastructure keeps suppliers at the table.
Valuation has only risen slightly over four years; the purchase is about revenue, not a story.
The regulatory gaps create charging points for infrastructure.