Merlin Securities, a US broker-dealer specialising in technology-driven prime brokerage services, has received a USD20m investment from leading Silicon Valley venture capital firm Sequoia Capital in an expansion round of financing.

The investment comes after a year in which Merlin Securities was honoured as a leading US prime broker in a survey of managers by Global Custodian magazine and in Institutional Investor's Alpha Awards.

'This marks a significant milestone in the evolution of Merlin Securities,' says managing partner Stephan P. Vermut. 'We formed Merlin with a vision of the future of prime brokerage and services to investment managers. The investment by Sequoia Capital validates that vision and gives us the resources to continue to pursue it.'

Sequoia Capital's Scott Carter says: 'We took a close look at the financial technology, prime brokerage and hedge fund spaces, and believe that Merlin's model of delivering superior reporting and trading technology combined with outstanding customer service to the hedge fund industry is the way of the future.

'As the hedge fund industry continues to be dominated by institutional investors, the reporting technologies, dedication to service and tight product integration offered by Merlin will provide an increasingly compelling value proposition.'

Founded in 2004 by Vermut, formerly founder, president and chief executive of Bank of America Prime Brokerage, Merlin provides reporting, trading, and operational services to more than 200 hedge fund clients worldwide.

The firm has agency and outsourced trading desks, and its reporting platform for single- and multi-prime hedge funds offers managers a fund transparency reporting tool that includes customisable reporting, absolute and relative performance attribution models, risk management components and multi-prime portfolio aggregation.

Merlin, which has offices in New York and San Francisco, was named the leading prime broker in North America, for single strategy funds and for funds with assets of less than USD100m in last year's Global Custodian prime brokerage survey, and the leading prime broker for funds with less than USD1bn in Alpha Magazine's 2007 hedge fund service provider survey.

Established in 1972 and based in Menlo Park, California, with offices in China, India and Israel, Sequoia Capital has backed the founders of some of the biggest names in the US technology industry including Apple Computer, Cisco Systems, Electronic Arts, Flextronics, Google, Oracle, PayPal, Yahoo! and YouTube.


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