Sequoia Capital and Paradigm, an investment firm focused on the cryptocurrency ecosystem, has bought a $1.15 billion stake in electronic trading firm Citadel Securities LLC.
The New York Times and Wall Street Journal reported the investment today. Citadel Securities LLC is now said to be valued at approximately $22 billion.
Chicago-based Citadel Securities provides the electronic trading infrastructure used to process transactions involving equities, options, futures and other types of assets. The company processes approximately 27% of the shares that change hands on the US stock market every day.
The Wall Street Journal reported today that Citadel Securities generated $6.7 billion in net trading revenue during 2020, nearly double its previous sales record. The company’s 2021 revenue is said to be even higher.
The $1.15 billion investment from Sequoia Capital and Paradigm will enable Citadel Securities to further fuel its growth. The company is reportedly planning to use a portion of the new funding to expand internationally. In the longer term, Citadel Securities is said to be considering an initial public offering.
The company reportedly has no plans to go public in the near future. Also, there is a possibility that it will eventually decide not to launch an IPO.
Investing in Citadel Securities is unusual for Sequoia, which is better known as a startup investor. However, the move is in line with a broader industry trend of venture capital firms investing in fast-growing financial services companies. The financial services sector received more venture funding in 2021 than any other industry, according to Research Recently published by Crunchbase.
Last year, Sequoia was one of the contributors to a $600 million Series H funding round for Stripe Inc. Important Payment processing giant $95 billion. The venture capital firm has also backed several other fintech, or fintech, companies.
Also notable is the move by cryptocurrency-focused investment firm Paradigm to buy a stake in Citadel Securities. Citadel Securities is reportedly not active in the cryptocurrency market. Announcement of Paradigm’s investment in an electronic trading firm led To speculate that Citadel Securities may take a different approach to digital assets going forward.
Sequoia, the other major investor in Citadel Securities, made cryptocurrency a major focus in 2021. Last October, Sequoia said It will become a registered investment advisor in a move designed to enable the firm, among other things, “to increase our investments in emerging asset classes such as cryptocurrencies.”
Separately, last year Google LLC announced CME Group Inc. $1 billion in investment, the operator of several exchanges that are used to trade a variety of financial instruments such as futures. With the investment, Google said CME Group will move its information technology systems to its cloud platform as part of a 10-year agreement.
Photo: Citadel Securities
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