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

Hedge fund billionaire Ken Griffin has offered 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 finest recognized for its early bets on tech firms similar to Apple and Google.

It’s the first outdoors 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 patrons 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 government 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 consists of increasing into crypto, stated Matt Huang, who co-founded Paradigm with Coinbase co-founder Fred Ehrsam.

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

The funding additionally prepares the bottom for a future IPO, in line with an individual accustomed to the scenario.

Citadel Securities is the largest market maker for strange American merchants — accounting for about 37 per cent of all retail buying and selling — paying varied brokerages for the proper to deal with their orders. Buying and selling platform Robinhood used this “fee for order stream” to supply its clients commission-free buying and selling, serving to usher within the period of free buying and selling within the US in recent times.

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

The agency was blamed by Redditors for Robinhood’s determination 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 called to testify earlier than the Home of Representatives monetary providers 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 gaggle of greater than 17,000 retail merchants at public sale, shopping for a duplicate of the US Structure for $43.2m. In 2019, he paid £95m for a London house close to Buckingham Palace.

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

Further reporting by Philip Stafford in London

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