Businesshala News Exclusive | Citadel Securities to Receive First Outside Investment

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Sequoia Capital and Paradigm’s $1.15 billion investment values ​​the electronic-trading firm at about $22 billion

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Citadel Securities is managed separately from Citadel, the $43 billion hedge fund on which Mr. Griffin built his fortune, an estimated $21.3 billion by Forbes. Founded in 2002, Citadel Securities has grown into a global giant that, according to its website, trades equities, options, futures, bonds and other assets, accounting for approximately 27% of the US stock market that changes hands every day. Holds shares. The majority of that volume comes from processing trades for online brokerages such as Robinhood Markets. Inc.

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The company said the deal will give Citadel Securities capital to continue expanding globally, and could be a precursor to an initial public offering for the business. There is no guarantee that the firm will go ahead with the listing and there are no plans to launch it anytime soon.

An explosion in trading volume and volatility in financial markets during the coronavirus pandemic boosted Citadel Securities’ revenue. In 2020, net business revenue stood at $6.7 billion, nearly double the previous high in 2018, according to a person familiar with the matter. Net business revenue was even higher in 2021. Citadel Securities has been led by Chief Executive Peng Zhao since 2017.

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GameStop. Last year’s reddit-fueled trading frenzy Corporation

And other so-called meme stocks drew attention to Citadel Securities’ relationship with the online brokerage.

Some small investors active on social media have accused Citadel Securities of masterminding the January 28, 2021 trade ban, in which the brokerage limited the ability of clients to buy GameStop and several other stocks. Citadel Securities has denied any role in the trading restrictions that punctuated a huge rally in Mem stocks.

Nevertheless, the episode sparked regulatory scrutiny of the firm and its business practices. Securities and Exchange Commission Chairman Gary Gensler has floated the idea of ​​banning payment for order flows, the practice in which trading firms pay brokerages such as Robinhood and TD Ameritrade to handle orders from their clients. Citadel Securities paid more than $1.1 billion for order flows during the first nine months of 2021, Businesshala Intelligence data shows, making it the largest source of such payments.

Sequoia, one of the nation’s largest venture firms with management of about $80 billion, has backed companies including Airbnb. Inc.

And they were publicly traded before Google. The paradigm focused on crypto and Web3, a reimagining of the Internet, that Citadel Securities are likely to include in the future as they become more regulated. To date, Mr. Griffin has been a crypto skeptic and avoids trading digital currencies in his businesses.

Mr. Griffin has previously considered deal making. The Journal reported in 2015 that the hedge-fund firm was considering going public, a move it had weighed even before the financial crisis. In 2019 the Journal reported that Blackstone was in talks to buy a stake in both Citadel Securities and Citadel, with firm executives estimating at the time that the hedge fund was valued at between $5 billion and $7 billion.

Write Cara Lombardo at [email protected] and Alexander Osipovich at [email protected]

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