Nikolay Storonsky, CEO of Revolut, plans to have a share sale worth $500 million in a significant move aimed at allowing employees to cash in their shares. This sale is set to take place later this year and will be coordinated by Morgan Stanley.
Details of the Share Sale
Revolut, the UK’s leading neobank, is drawing up plans to sell approximately $500 million worth of stock. This transaction is unique as it is designed to allow Revolut employees to cash in their shares, rather than raising new capital. The fintech company is confident in maintaining its $33 billion valuation from 2021, bolstered by its strong financial performance and expanding customer base.
Financial Performance and Valuation
Revolut’s FY2023 revenue is expected to double to £1.7 billion ($2.15 billion), reflecting its robust growth trajectory. The company now boasts over 40 million customers worldwide. This strong performance is anticipated to support Revolut’s aim to match its previous valuation of $33 billion. Notably, prominent investor Schroder believes Revolut’s value has climbed by 45% since last year.
The Role of Morgan Stanley
Morgan Stanley will manage the share sale, expected to take place later in 2024. The transaction, also known as a secondary sale, allows company shareholders to sell their stock, converting assets into cash and potentially boosting the company’s valuation. Revolut last conducted a secondary share sale in 2021, following its successful Series E funding.
Challenges and Future Prospects
Revolut’s pricing and valuation challenges have been compounded by delays in securing a full UK banking license. Regulatory scrutiny has been intense, with the company previously cautioned by regulators after significant discrepancies were found in its financial statements. Despite these hurdles, Revolut continues to innovate and expand, including launching new solutions like an advanced AI feature to protect against card scams.
The company’s strategic initiatives and ongoing efforts to secure a banking license are critical for its future growth. Storonsky has expressed confidence that these challenges are temporary and primarily due to broader regulatory caution in the banking sector.
Rivalry with Monzo
Revolut faces significant competition from fellow challenger bank Monzo, which recently raised £340 million in funding, increasing its overall valuation to $5 billion. Monzo’s growth trajectory has been impressive, having been granted a full banking license by the Financial Conduct Authority (FCA) in 2017. This rivalry adds pressure on Revolut to maintain its competitive edge and continue its growth momentum.
Conclusion
The planned $500 million share sale by Revolut, coordinated by Morgan Stanley, represents a significant move for the fintech giant. Despite facing regulatory and market challenges, Revolut’s strong financial performance and strategic initiatives position it well for continued growth. As the company navigates these hurdles, its ability to maintain its high valuation and expand its market presence will be crucial.
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