Revolut, a prominent fintech company in the UK, is eyeing a valuation greater than $40 billion (£30 billion) in an upcoming share sale aiming to enhance its reputation as Europe’s most valuable start-up, as stated by three informed sources. The company, boosted by SoftBank, is partnering with Morgan Stanley to present around $500 million (£380 million) of current shares for sale, encompassing those possessed by its employees.
A valuation exceeding $40 billion would represent a 20% increase from Revolut’s valuation of $33 billion (£25 billion) achieved in its 2021 fundraising. It would also significantly top the market capitalisation of British financial institution NatWest, and closely rival that of the Lloyds Banking Group, while surpassing Paris-based Société Générale. Achieving such a lofty target would undoubtedly challenge the recent adverse conditions faced by Europe’s fintech sector over the past two years.
Another significant player in the fintech field, Stockholm’s Klarna, saw its worth diminish from $46 billion to $6.7 billion following a fundraising event in 2022. Several venture capital investors have subsequently re-evaluated their stakes in Revolut.
Revolut’s aspirations are further complicated by ongoing speculation over the future of its application for a UK banking licence, submitted over three years ago. A robust licensing status is crucial to boost the fintech’s lending capabilities and profits within its primary market, the UK. Nonetheless, regulatory approval has been delayed due to concerns raised by auditors over the verifiability of Revolut’s 2021 revenue figures.
The cryptocurrency trading surge – a boon for Revolut’s profits – has subsided, leading the company to record losses in its latest set of results for 2022. Meanwhile, advantages gained from increased customer deposits and higher interest rates were nullified by rising operational expenses.
Established in 2015 by Nikolay Storonsky and Vlad Yatsenko, Revolut has shown significant growth, outpacing UK competitors like Monzo and Starling. Spurred by aggressive global expansion, Revolut now services approximately 40 million global customers, with a third of them residing in the UK. In contrast, Monzo and Starling, which are recognised as banks, operate only in the UK and each service fewer than 10 million customers.
In 2021, Revolut acquired an investment of $800 million from backers including Tiger Global Management and SoftBank’s Vision Fund 2. The firm anticipates that revenues will surge to £1.7 billion in 2023, a substantial increase from its preceding year’s earnings of £923 million. Notably, they aim to achieve a “double-digit net profit margin”.
The fintech firm is relocating its central office to a standout building within the financial hub of London, Canary Wharf. Investors like Molten Ventures, Ribbit Capital, Balderton Capital, and TCV have supported Revolut’s growth. However, when asked to comment, both Revolut and Morgan Stanley chose to remain silent. Copyright belongs to The Financial Times.