Ken Griffin’s Citadel Securities sells $1.2bn stake to Sequoia and Paradigm

Hedge fund billionaire Ken Griffin has bought a $1.2bn stake in Citadel Securities to enterprise capitalists Sequoia and Paradigm, paving the best way for an preliminary public providing of one of many world’s greatest market makers.

The deal, which values the buying and selling agency at about $22bn, marks a uncommon foray into the monetary sector for Sequoia, the Silicon Valley group greatest identified for its early bets on tech firms corresponding to Apple and Google.

It’s the first exterior funding in Citadel Securities, which was based in 2001 as a separate entity to Griffin’s $43bn hedge fund Citadel, and has emerged as a serious participant in world markets in its personal proper.

One of many greatest beneficiaries from the transfer to high-speed buying and selling, Citadel Securities acts as an middleman between sellers and consumers in shares, bonds and derivatives. It has grown within the greatest market maker for US shares, dealing with about 27 per cent of all US equities buying and selling, by stealing market share from bulge-bracket banks.

Citadel Securities’ chief govt Peng Zhao stated the corporate deliberate to make use of the funding to develop extra aggressively internationally, and into new markets and asset courses. This contains increasing into crypto, stated Matt Huang, who co-founded Paradigm with Coinbase co-founder Fred Ehrsam.

Griffin has been vital of cryptocurrencies up to now, describing them in October as “a jihadist name that we don’t consider within the greenback”. Nevertheless, he added on the time: “Regardless of the virtues are of that product, which I feel are fairly nebulous, will turn out to be very totally different in a world of aggressive exchanges and aggressive pricing by tier-one market makers prepared to place their greatest foot ahead.” 

The funding additionally prepares the bottom for a future IPO, in response to an individual aware of the state of affairs.

Citadel Securities is the largest market maker for abnormal American merchants — accounting for about 37 per cent of all retail buying and selling — paying numerous brokerages for the precise to deal with their orders. Buying and selling platform Robinhood used this “fee for order movement” to supply its prospects commission-free buying and selling, serving to usher within the period of free buying and selling within the US lately.

Citadel Securities’ prowess has attracted envy from different components of Wall Road, and elevated consideration from regulators and politicians. It was pushed uncomfortably on to the general public stage final 12 months in the course of the market upheaval surrounding buying and selling in GameStop and different meme shares.

The agency was blamed by Redditors for Robinhood’s choice to curtail buying and selling in GameStop on the peak of the frenzy, and a few of them argued that the agency advantages from buying and selling at their expense.

Griffin was referred to as to testify earlier than the Home of Representatives monetary companies committee in February 2021 following the GameStop frenzy. He defended his companies and stated he was satisfied that the “extremely optimistic impression” of Citadel and Citadel Securities would shine by way of.

Griffin owns about 85 per cent of Citadel Securities, which might worth his stake within the enterprise at about $18bn. Late final 12 months Griffin beat a bunch of greater than 17,000 retail merchants at public sale, shopping for a replica of the US Structure for $43.2m. In 2019, he paid £95m for a London home close to Buckingham Palace.

The enterprise capital funding was first reported by the Wall Road Journal.

Further reporting by Philip Stafford in London


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