Capitolis agrees to buy eSecLending for $200m in cash

Capitolis has agreed to buy eSecLending for $200 million in cash, a proposed acquisition that would add securities-lending capabilities to its financial-resource-optimization platform. The Capitolis eSecLending acquisition remains conditional on customary closing terms, including regulatory approvals and antitrust clearance, according to the companies’ announcement.

Capitolis will acquire eSecLending from Parthenon Capital and eSecLending’s management team. Parthenon Capital will also make an undisclosed investment in Capitolis as part of the transaction, the announcement said.

eSecLending is an independent securities-lending business that works with institutional asset owners, including pension funds, insurers and asset managers, to lend securities to major global banks, Capitolis said.

What would Capitolis gain from buying eSecLending?

Capitolis said the transaction would bring securities lending into its existing offering for managing financial resources. The company also expects to gain access to eSecLending’s network of institutional asset-owner clients.

Securities lending would sit alongside Capitolis’ work across repo and financing markets, according to the company. Capitolis said the combined offering is intended for banks and institutional investors, although any resulting efficiency or growth remains a company expectation rather than a completed outcome.

Okan Pekin, Capitolis’ president, said the companies had known each other for years and had worked together on introducing new products. He cited eSecLending’s client relationships, the quality of its business and the expertise of its team as reasons for combining the companies.

Which eSecLending business is excluded from the deal?

eSecLending (Europe) Limited is not part of the planned transaction. It is expected to continue providing services to eSecLending, according to Capitolis.

The agreement marks Capitolis’ fourth strategic acquisition in five years, the company said. Gil Mandelzis, Capitolis’ founder and chief executive, said eSecLending would add a business that complements Capitolis’ existing lines.

FT Partners is serving as Capitolis’ exclusive strategic and financial adviser, while WilmerHale is its legal adviser. Berenson & Company and Raymond James are financial advisers to eSecLending; Troutman Pepper Locke and Debevoise & Plimpton are acting as its legal advisers, according to the announcement.

The parties have announced an agreement, not a completed acquisition. Completion depends on the remaining closing conditions and required clearances.

This story draws on original reporting from Finextra Research.