Unlock the Editor’s Digest for free
Roula Khalaf, Editor of the FT, selects her favourite stories in this weekly newsletter.
UK fintech Revolut is targeting a valuation exceeding $40bn in a share sale that would cement its status as Europe’s most valuable start-up, according to three people with knowledge of the plans.
The SoftBank-backed company is working with Morgan Stanley to sell about $500mn worth of existing shares, including those held by employees, the people said.
More than $40bn would be at least 20 per cent higher than the $33bn valuation Revolut achieved in a 2021 fundraising. It would surpass the market capitalisation of UK lender NatWest and Paris-based Société Générale, and be on par with that of Lloyds Banking Group.
The ambitious target, if reached, would defy a difficult market for European fintech groups in the past two years. Stockholm-based Klarna, another prominent fintech, saw its valuation crash to $6.7bn from $46bn in a 2022 fundraising. Some venture capital investors have since marked down their stakes in Revolut.
The UK start-up is also facing continuing uncertainty over the fate of its application for a UK banking licence, which it first submitted more than three years ago. A banking licence is key for the fintech to boost lending and profit in its biggest market. However, regulators have stalled as Revolut was rocked by problems including a warning from auditors that they could not fully verify revenue figures in its 2021 accounts.
The company slipped to a loss in its latest delayed set of results for the year 2022 as a boom in cryptocurrency trading that previously boosted profits abated. Meanwhile rising costs offset the benefits from higher customer deposits and higher rates.
Revolut was founded by Nikolay Storonsky and Vlad Yatsenko in 2015 at about the same time as UK challenger banks such as Monzo and Starling. Since then it has far outpaced rivals in terms of customer growth and has pursued an aggressive international expansion.
Revolut has about 40mn customers globally, of which a third are based in the UK. Starling and Monzo, which are regulated as banks, have each less than 10mn customers and only operate in the UK.
In 2021, it raised $800mn from investors including SoftBank’s Vision Fund 2 and Tiger Global Management. Revolut is moving its headquarters to one of the most prominent buildings in London’s Canary Wharf financial district.
The fintech has also been backed by investors including TCV, Balderton Capital, Ribbit Capital and Molten Ventures.
Revolut and Morgan Stanley declined to comment.
Additional reporting by Tim Bradshaw in London
Read the full article here