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