Revolut Achieves Valuation of $45 Billion Through Employee Share Sale

Revolut has achieved a valuation of $45 billion through a share sale involving its employees, standing resilient against a broader downturn in the fintech sector and reinforcing its position as the most valuable start-up in Europe.

This development occurs as the UK government endeavors to persuade the company to pursue a listing in London instead of New York.

On Friday, the UK-based firm announced that institutional investors, including Coatue, D1 Capital Partners, and Tiger Global, purchased approximately $500 million worth of shares from employees.

Chief Executive Nikolay Storonsky expressed satisfaction in providing employees the chance to benefit from the company's overall success.

This valuation surpasses the $33 billion that Revolut reached during a fundraising round in 2021, which was led by SoftBank and Tiger Global, positioning Revolut as the second-most valuable bank in the UK, following HSBC and preceding Barclays, Lloyds Banking Group, and NatWest.

This announcement follows the recent acquisition of a highly anticipated banking license by Revolut this summer, which is expected to heighten interest in the company's initial public offering among global stock exchanges.

The UK Treasury has scheduled discussions with Revolut in the autumn to encourage a London listing over one in New York.

However, sources indicate that the fintech company still leans towards a potential listing on the Nasdaq.

In recognition of Revolut's esteemed status, the New York Stock Exchange celebrated its regulatory approval with a billboard in Times Square earlier this month, proclaiming, "NYSE congratulates Revolut on securing its UK banking license."

This latest valuation further solidifies Revolut's leading position among European tech start-ups, outpacing competitors such as Checkout.com and Klarna, both of which have faced significant declines in valuation in recent years.

Klarna's worth plummeted from $46 billion to under $7 billion during a fundraising round in 2022, while Checkout reduced its internal valuation to $11 billion that same year, having previously achieved a $40 billion valuation from investors.

The new valuation remains lower than that of American growth companies in the sector, such as Stripe, which was last assessed at $65 billion, and the US-listed Brazilian digital bank Nubank, with a market capitalization of $66 billion.

Revolut's co-founders, Nikolay Storonsky and Vlad Yatsenko, expressed to the media last year, during a period of regulatory uncertainty, their preference for maintaining the company as a private entity; however, they indicated that if a public offering were to occur, New York would likely be their choice. Storonsky remarked that the London Stock Exchange is "much less liquid," leading him to question its viability.

The recent share sale estimates Storonsky's personal stake in the company at nearly $8 billion, according to an analysis by the Financial Times of public documents from the previous August. Meanwhile, Chair Martin Gilbert's shares could be valued at over $850,000.

Revolut opted not to comment on these figures. Last month, Revolut received a UK banking license, concluding over three years of negotiations with regulators and enabling the company to grow within its home market.

Despite the lengthy process to obtain the UK license, Revolut has already amassed over 45 million customers worldwide, including approximately 9 million in the UK, where it was established in 2015. The company also holds a European banking license from Lithuanian authorities and was granted one in Mexico this year.

The acquisition of the sought-after UK license is perceived as a significant endorsement that may enhance Revolut's prospects of achieving bank regulation in other regions, including the United States.

Philippe Laffont, founder of Coatue, expressed strong confidence in Revolut's mission to democratize financial services globally and commended the company's demonstrated capacity to scale across numerous markets.

Notably, SoftBank, a key investor in Revolut's previous fundraising round, did not take part in the latest share sale, as the Japanese firm had to relinquish its priority class of shares to comply with regulatory stipulations for the UK banking license.

Revolut has implemented a robust strategy for international expansion, resulting in a customer base that significantly surpasses that of its UK competitors, Monzo and Starling. Recently, the company announced a pre-tax profit of £438 million for 2023, a notable increase from a loss of £25 million in the prior year, with revenues nearly doubling to £1.8 billion.

Employees who have been with Revolut for a minimum of one year and are not on gardening leave were permitted to sell 20 percent of their vested share options at a price of $865.42 per share during this sale. In contrast to previous sales, former employees were not eligible to participate.

Revolut Group Holdings Ltd, commonly referred to as Revolut, is an international neobank and financial technology firm headquartered in London, United Kingdom. Established in 2015 by Nikolay Storonsky and Vlad Yatsenko, the company provides a wide array of banking services tailored for both individual consumers and businesses. 

Its offerings encompass banking solutions, currency exchange, debit and credit cards, virtual cards, Apple Pay integration, interest-earning "vaults," personal loans, buy now pay later (BNPL) services (where it holds a banking license), stock trading, cryptocurrency, commodities, human resources, and various other financial services.