Fintech
Employees of fintech giant Revolut cash in on $500m stock sale | Economic news
Revolut, Britain’s most valuable fintech, is lining up Morgan Stanley to coordinate a sale of shares in the company worth up to £400 million, Sky News understands.
By Mark Kleinman, City Editor @MarkKleinmanSky
Saturday 18 May 2024 12.19pm, UK
Executives at Revolut, Britain’s biggest fintech, are drawing up plans to allow employees to cash out by selling shares valued at hundreds of millions of pounds.
Sky News has learned that the banking and payments services provider is deploying investment bankers to coordinate a secondary share sale worth around $500m (£394m).
Morgan Stanley, the Wall Street bank, is expected to be tasked with working on the proposed stock offering, which will take place later this year.
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City sources said this weekend that Nik Storonsky, co-founder and chief executive of Revolut, was determined to seek a valuation of at least $33 billion (£26 billion) raised in a primary funding round in 2021.
“It won’t be a negative round,” said one person familiar with Revolut’s thinking.
While the fintech sector, which has more than 40 million customers, has no plans to raise new capital as part of the transaction, any sizeable share sale will still be closely monitored across the global fintech sector.
It is expected that it will be reserved for company employees.
Revolut ranks among the world’s largest financial technology companies, with revenues virtually doubling last year to around £1.7 billion, according to data due to be published in the coming months.
Founded in 2015, it has faced a number of regulatory and compliance challenges, with reports last year highlighting the release of funds from accounts flagged as suspicious by the National Crime Agency.
The company’s growth has occurred at breakneck speed, with customer numbers increasing from 16.4 million at the time of its Series E fundraising nearly three years ago.
Image: The company’s growth has occurred at breakneck speed. Photo: Revolution
Insiders have argued that despite the prolonged decline in tech valuations over the past two years, Revolut’s relentless expansion would easily justify its retention of its status as Britain’s most valuable fintech.
Monzo, the UK-based digital bank, recently confirmed a Sky News report that it had closed a funding round worth almost £500 million, including backing from an arm of Google owner Alphabet and of a Singaporean sovereign wealth fund.
Elsewhere, however, the funding landscape has been bleaker, with a growing number of technology companies that had attracted valuations of more than $1 billion now struggling to stay afloat.
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Revolut has awarded share options to many of its 10,000 employees as part of their remuneration packages, although it was unclear how many would be eligible to give up shares in the transaction by the end of the year.
A source close to the company said it had received numerous expressions of interest from potential investors.
Revolut’s current shareholders include SoftBank’s Vision Fund and Tiger Global.
News of the proposed share sale comes as Revolut investors continue to await positive news on its application for a UK banking license.
Image: Revolut applied for a UK banking license more than three years ago. Photo: Reuters
The company applied to regulators to become a bank in Britain more than three years ago, but has so far failed to gain approval.
Storonsky has publicly criticized the delay and last year questioned the approach of British regulators and politicians, suggesting it would not consider listing on the London Stock Exchange.
An initial public offering of Revolut appears to be still some way off, although it would not surprise investors or industry players if it began a listing process in the next couple of years.
A person close to Revolut said board members were among those expected to participate in the secondary share sale, although further details were unclear this weekend.
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The company is chaired by Martin Gilbert, the City veteran who faced governance and performance challenges at Assetco, the London-listed asset manager he runs.
Its other directors include Michael Sherwood, the former Goldman Sachs executive who was co-responsible for its operations outside the United States and who was considered one of the most skilled traders of his generation.
An outside shareholder of the company said excluding non-employees from the deal could draw criticism from some investors.
Revolut has conducted secondary share sales of this type in the past, including after its 2021 Series E round.
This weekend, Revolut declined to comment.