Revolut Still Searching For A UK Banking License

In the ever-evolving landscape of the UK fintech sector, Revolut, under the stewardship of Nikolay Storonsky, has seen its valuation undergo a significant revision. Initially valued at an impressive $33 billion in 2021, the enterprise now faces a re-evaluation, with its worth being adjusted downwards by $5 billion.

This recalibration by TriplePoint Venture Growth, a prominent US-based technology investor, signifies an 18% depreciation in its stake towards the end of the preceding year, as revealed in recent financial disclosures. Such adjustments suggest a revised valuation of $23 billion for Revolut, a decrease from the $28 billion estimated a year earlier.

This is not the first occasion TriplePoint has reconsidered its valuation of Revolut, which achieved its zenith at $33 billion. The investment firm had previously expressed reservations about this valuation, marking down its stake by 15% last year. The cumulative effect of these revisions points to a 30% decrease in Revolut's market value since it attained the status of Europe’s most valuable fintech entity, following an $800 million funding round supported by entities including SoftBank.

The trend of revaluation is not unique to TriplePoint; other investors such as Schroders and Molten Ventures have also adjusted their stakes downwards by 46% and 54%, respectively, in the last year.

Despite this, the reduction by TriplePoint arrives at a time when tech valuations have broadly recovered, exemplified by Revolut’s competitor, Monzo, recently achieving a £4 billion valuation, surpassing its previous £3.5 billion mark in 2021.

Sajal Srivastava, TriplePoint’s Chief Investment Officer, addressed this discrepancy to analysts, attributing the writedowns to the passage of time since these firms last engaged in fundraising activities. He pointed out that these earlier rounds occurred during peak valuation periods for fintech firms, contrasting with the current valuation landscape for publicly traded counterparts in the sector. Srivastava, however, remains optimistic about the potential for significant growth following future financing rounds or exit events.

A pivotal factor in Revolut’s journey has been its pursuit of a UK banking license, an application submitted to the Bank of England's Prudential Regulation Authority in January 2021. The process has been notably protracted, with The Telegraph disclosing potential regulatory hurdles indicated by the Bank of England to The Treasury.

Despite these challenges, Revolut has been proactive in addressing the concerns raised, notably those related to its shareholder structure and financial transparency, with indications that SoftBank, its principal shareholder, has consented to requisite adjustments.

Amidst these developments, Revolut's aspiration for a banking licence remains steadfast, with the company’s new UK lead, Francesca Carlesi, affirming a commitment to overcoming regulatory hurdles. The firm reported a 45% surge in revenue to £922.5 million for 2022, alongside a £25.4 million loss.

Revolut, while refraining from commenting on investor valuations, continues its efforts towards securing a banking licence, a testament to its resilience and determination in navigating the complexities of the UK’s regulatory environment.

By Brett Hurll