Revolut, the UK-based fintech giant, has achieved a remarkable $45 billion valuation in a recent share sale by employees, bucking the prevailing trend of declining valuations across the fintech sector.
The move solidifies Revolut’s standing as Europe’s most valuable start-up and highlights the company’s resilience in the face of broader market challenges.
Institutional investors Coatue, D1 Capital Partners, and Tiger Global were among the key players in this transaction, which saw employees sell a portion of their vested share options.
Revolut beats 2021 valuation by a big margin
The $45 billion valuation significantly surpasses the $33 billion mark Revolut reached during its 2021 fundraising led by SoftBank and Tiger Global.
This new valuation places Revolut as the second most valuable bank in the UK, trailing only HSBC and outpacing traditional banking giants such as Barclays, Lloyds Banking Group, and NatWest.
The latest valuation also reaffirms Revolut’s dominance among European tech start-ups, placing it well ahead of competitors like Checkout.com and Klarna, both of which have seen their valuations plummet amid a broader tech industry downturn.
Klarna, for instance, saw its valuation drop from $46 billion to under $7 billion during a 2022 fundraising round, while Checkout.com reduced its internal valuation to $11 billion the same year, down from a previous high of $40 billion.
Still behind US counterparts?
Despite the impressive valuation, Revolut still trails behind some of its US-based counterparts, such as Stripe and Nubank, which boast valuations of $65 billion and $66 billion, respectively.
Nonetheless, the significant valuation increase is expected to heighten interest in Revolut’s anticipated initial public offering (IPO), with global stock exchanges eager to attract the fintech giant.
The UK Treasury is planning discussions with Revolut in the autumn, aiming to persuade the company to list in London rather than New York.
However, insiders suggest that Revolut continues to lean towards a potential float on the Nasdaq, with co-founders Nikolay Storonsky and Vlad Yatsenko expressing a preference for a New York listing due to the London Stock Exchange’s relative lack of liquidity.
Revolut top executives add to their net worth
The share sale has notably boosted the fortunes of Revolut’s top executives. Based on a Financial Times analysis of public documents from August, Storonsky’s personal stake in the company is now valued at nearly $8 billion.
Meanwhile, Chair Martin Gilbert’s stake could be worth more than $850,000. Revolut has declined to comment on these figures.
This significant development comes on the heels of Revolut being awarded a UK banking licence last month, following a protracted three-year process with regulators.
The licence is expected to pave the way for Revolut to expand its operations in its domestic market, further enhancing its competitive edge.
Despite the delay in securing the UK licence, Revolut has already established a substantial customer base, boasting more than 45 million customers globally, including approximately 9 million in the UK, where the company was founded in 2015.
The fintech company also holds a European banking licence from authorities in Lithuania and recently secured a banking licence in Mexico.
The UK licence is seen as a crucial vote of confidence that could improve Revolut’s chances of securing similar regulatory approvals in other key markets, including the United States.
Revolut’s growth strategy
Revolut’s growth strategy has been marked by aggressive international expansion, with its customer base now dwarfing those of UK-based competitors Monzo and Starling.
Last month, the company reported a pre-tax profit of £438 million for 2023, a significant turnaround from a loss of £25 million the previous year.
Additionally, Revolut’s revenues nearly doubled, reaching £1.8 billion, underscoring the company’s rapid financial growth.
Employees eligible to participate in the share sale included those who had been with Revolut for at least a year and were not on gardening leave. These employees were allowed to sell 20% of their vested share options at a price of $865.42 per share.
Unlike previous share sales, former employees were not eligible to participate in this round.
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