Ken Griffin’s Fortune Jumps $5 Billion In A Day After Investment From Sequoia Capital, Paradigm

view original post

The hedge fund mogul known for his role in the GameStop stock craze and buying the U.S. constitution climbs seven spots among the nation’s richest.

Investment tycoon Ken Griffin is more than $5 billion wealthier after venture capital firms Sequoia and Paradigm invested $1.15 billion in market making firm Citadel Securities, according to Forbes’ estimates. The deal, announced Tuesday, values Citadel Securities at $22 billion. Griffin sold around 5% of his stake in the firm, Forbes has learned, meaning the billionaire is walking away with more than $1 billion in cash, pre-tax.

The value of Griffin’s remaining stake in Citadel Securities has also risen, thanks to the firm’s higher valuation. Griffin’s 80% stake is now worth an estimated $15.9 billion, Forbes estimates, up nearly $5 billion. (Forbes applies a discount to private company stakes.) In all, Forbes estimates Griffin to be worth $26.5 billion, up from $21.3 billion before the deal. He is now the 26th richest person in America, jumping more than seven spots thanks to the transaction.

The new investment marks the first time Griffin has accepted any outside investment for his electronic trading firm, which he founded in 2002 and which says it processes more than one fourth of all U.S. stock trades. About 15% of the privately held company is owned by partners at Citadel Securities, which employs 1,200 people.

Citadel Securities has grown amid the pandemic surge in retail investing, as day traders have flocked to zero-fee brokerages like Robinhood. A market maker, Citadel Securities pays brokerages to execute stock transactions made by investors; it makes money on the spread between what it pays for stocks and what it sells them for. The firm generated a record $6.7 billion in revenue in 2020, and, according to a company spokesperson, had an even better 2021. 

MORE FOR YOU

Griffin, 53, began trading in 1987 from his Harvard dorm, installing a satellite dish on the roof to get real-time stock quotes. He founded hedge fund Citadel LLC in 1990, which today manages over $39 billion in assets. He owns an estimated 85% of Citadel LLC, plus more than $1 billion worth of art and personal real estate, including work by Jean-Michel Basquiat and a New York City penthouse he bought for $238 million in 2019 in what was then reported to be the most expensive home sale ever.  

Little known outside financial circles, Griffin was thrust into the spotlight last year during the Gamestop investment craze as Citadel Securities’ relationship with mobile trading platform Robinhood came under scrutiny when Robinhood clamped down on investors’ ability to make trades. In February 2021, Griffin testified before the U.S. House Financial Services Committee alongside Robinhood CEO Vlad Tenev and others involved in the meme stock episode. A later report from the Securities and Exchange Commission debunked conspiracy theories about illegal activity between Citadel Securities and Robinhood.

In November, Griffin made headlines when he outbid a cryptocurrency investment group for a first-edition copy of the U.S. Constitution, shelling out $43.2 million for the historical document at a Sotheby’s auction. Griffin is also known as a GOP mega donor. In the 2020 election cycle, he donated more than $67 million to Republican groups and candidates, according to a report from OpenSecrets.org. Griffin also donated to President Biden’s Inaugural Committee.