In a move that could solidify its status as Europe's most valuable startup, Revolut, a UK-based fintech major, is reportedly eyeing a valuation of over $40 billion in an employee share sale.
What Happened: Revolut, which is backed by SoftBank Group Corp. (OTC:SFTBY), is working with Morgan Stanley to sell approximately $500 million worth of existing shares, including those owned by employees, Financial Times reported, citing three people with knowledge of the plans.
The proposed valuation would represent a 21% increase from Revolut's $33 billion valuation in its 2021 fundraising round. This would also place Revolut's market capitalization on par with that of Lloyds Banking Group Plc. and above that of NatWest and Société Générale SA.
Despite the challenging market for European fintech companies over the past two years, Revolut's ambitious target, if achieved, would be a remarkable feat. Other prominent fintechs like Klarna have seen their valuations plummet, raising concerns about the sector's stability.
Revolut's application for a UK banking license, which is crucial for the company to expand its lending and profit in its primary market, has been pending for over three years. This, coupled with other issues, has led to uncertainty about the company's future.
Revolut did not immediately respond to Benzinga's request for comment.
Why It Matters: Revolut's proposed valuation comes amid a series of strategic moves. Earlier this month, the company partnered with GTN to launch bond trading for European customers. This move was seen as a significant step in Revolut's mission to build an all-in-one investment platform.
However, Revolut's journey has not been without its challenges. In May 2023, the company's application for a UK banking license was under scrutiny after its auditor, BDO, cast doubt on its 2021 revenue numbers. This raised concerns about the accuracy of the company's financial reporting.
Despite these challenges, Revolut has continued to expand its offerings. In February 2023, the company launched cryptocurrency staking in the UK and the European Economic Area, allowing users to earn income on their crypto assets.
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This story was generated using Benzinga Neuro and edited by Kaustubh Bagalkote