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A $40 billion valuation would rank Revolut alongside Europe’s biggest banks

By Thomson Reuters Jun 21, 2024 | 9:23 AM

By Elizabeth Howcroft and Tommy Reggiori Wilkes

LONDON (Reuters) – British fintech Revolut is seeking a valuation of more than $40 billion through a planned share sale, sources have told Reuters, a valuation that would make it worth more than Germany’s Deutsche Bank and Britain’s Barclays.

Revolut did not immediately respond to a request for comment.

If confirmed, the valuation would confirm that the company founded by Nikolay Storonsky in 2015 is Europe’s most valuable start-up and set it apart from the rest of the fintech industry where valuations have been squeezed.

Revolut’s earns revenue from payments, subscriptions and from customers trading stocks and cryptocurrencies. It wants a UK banking licence to expand into new areas but is still waiting more than two years after applying for one.

BIGGER THAN BARCLAYS?

Revolut would leapfrog Barclays and NatWest and move near to Lloyds if it secured a $40 billion-plus valuation, according to LSEG data.

The London-based fintech would be worth about four times the value of British money transfer firm Wise.

Such a valuation would be a more than 20% jump on its 2021 valuation of $33 billion, which Revolut achieved when raising cash from investors including Softbank’s Vision Fund and Tiger Global Management.

One investor, Schroders, reduced its valuation for Revolut in 2022 before increasing it in 2023, according to the annual results of the Schroders investment trust which owns shares in Revolut. Start-ups more broadly have turned to complex deals to avoid what are known as “down rounds”, as higher interest rates deflated pandemic-era valuations.

Revolut has also faced regulatory scrutiny over its internal accounting since the 2021 fundraise.

Last year Revolut Ltd’s auditor BDO LLP was unable to independently verify three-quarters of the 636 million pounds ($765 million) of revenue Revolut reported in its long-delayed 2021 accounts.

They were signed off after months of delays. A spokesperson for Revolut said at the time that the bank’s overall revenue figure “was not in question” and BDO’s concerns were “remedied in 2021”.

DEPOSITS

Revolut’s customer deposit base remains minuscule versus big banks, which use deposits to fund vast mortgage and loan books.

Revolut’s revenue has been rising fast, hitting a record $1.1 billion for 2022.

The drivers for that growth have changed.

In 2022 – its 2023 accounts have yet to be published – revenue was driven by interest income growth.

In 2021, when it made its first full-year profit, Revolut’s revenue was helped by a boom in cryptocurrency trading.

CUSTOMERS

Revolut, which employs about 10,000 people, has 40 million customers globally, including 9 million in the UK.

That compares with 27 million at Lloyds and 19 million at NatWest, although revenue earned per customer is generally much higher at banks.

(Reporting by Elizabeth Howcroft and Tommy Reggiori Wilkes; Editing by Barbara Lewis)