‘Klarna Effect’ Boosts Digital Bank Revolut to £ 21 Billion Valuation in Talks with SoftBank | Economic news
Revolut, the UK-based banking and payments app, is in detailed talks with the world’s largest tech fund over a fundraiser that could value it at over $ 30 billion (21.7 billion billion pounds sterling).
Sky News has learned that SoftBank’s Vision Fund 2 is among the small number of investors who have been invited by Revolut and its advisers to submit proposals in recent weeks for an investment of between $ 750 million (£ 542 million ) and $ 1 billion (£ 723 million).
If completed, the transaction would instantly transform Revolut into one of the most valuable fintech companies ever launched in Europe.
Industry sources said the potential investment was being discussed at a valuation of between $ 30 billion and $ 40 billion (£ 28.9 billion), with a formal deal still to be in a matter of weeks.
SoftBank’s first Vision fund, which has supported companies like Uber Technologies, owner of the ridesharing platform, the Klarna platform, buy now and pay later, has had discussions with Revolut in the past but hasn’t failed to strike a deal.
The identity of the other funds in talks with Revolut was unclear over the weekend, although the size of the potential investment means that only US-based companies such as Tiger Global Management or Dragoneer Investment Group are likely. to be considered.
A source said only one of the investors in discussions with Revolut was likely to participate in the round.
Revolut’s potential valuation is staggering in any context, but especially given that shareholders were willing to expect its next capital raise to value it between $ 10 billion and $ 15 billion just a short while ago. three months.
Sky News reported the aspiration of 10 to 15 billion dollars in mid-April, while Bloomberg News reported last month that a deal could see Revolut valued at more than $ 20 billion.
Last year alone, Revolut raised funds from US investors TCV and TSG Consumer Partners for a valuation of $ 5.5 billion (£ 3.98 billion).
The new negotiations would mean the digital bank is now worth six times more than it was a year ago – after seeing its losses double.
Klarna’s recent fundraising, valued at $ 45.6 billion, would have been a factor in Revolut’s ability to aim for a much higher valuation.
The latest developments will fuel questions about the ability of loss-making tech companies to attract higher prices than all but the largest publicly traded companies.
Even at the lower end of its envisioned $ 30 billion to $ 40 billion range, Revolut would be worth more than nearly three-quarters of the companies in London’s FTSE-100 index.
A global wave of investor interest in public and private tech companies has propelled valuations to record highs – fueled in part by the recent deluge of Special Purpose Acquisition Companies (SPACs) listed in the United States.
Nik Storonsky, founder and chief executive of the company, said recently that the company is at the start of discussions about raising additional funds while stressing that it does not need additional capital.
Last month Revolut disclosed losses in 2020 of just over £ 200million as its rapid growth resulted in a substantial increase in personnel costs.
He said he was profitable in the last two months of the year.
Mr Storonsky would become several times a paper billionaire if the latest fundraising talks were successful.
Subscribe to the Daily podcast on Apple Podcasts, Google Podcasts, Spotify, Spreaker
Revolut, which is now present in 35 countries and more than 15 million customers, is in the process of applying for a banking license in the United Kingdom which will allow it to accept deposits in its home market.
It is chaired by City veteran Martin Gilbert, while former Goldman Sachs International co-CEO Michael Sherwood also sits on its board.
The company recently set up a share capital plan for its 2,200 employees, who would see their shareholdings worth substantial sums at the last valuation.
He has had to deal with significant compliance issues and a wave of executive departures, but is said to be confident he has largely corrected historic flaws in his systems.
Mr Storonsky recently said he was working on expansion plans including India, Latin America and South Korea.
The current fundraising talks are likely to spark speculation about when and where Revolut could possibly choose to go public.
Chancellor Rishi Sunak supported a series of proposals to improve the UK’s listing regime for fast growing tech companies.
A review from Ron Kalifa, the former head of Worldpay, recently recommended changes to UK listing rules and a new growth fund to help secure Britain’s leadership in the global industry. fintech.
Other popular UK fintechs include Wise, the payments service, which is about to be listed in London with a valuation of over £ 5 billion.
FT Partners, the U.S. financial technology-focused investment bank that recently advised French insurer Mollie on an $ 800 million fundraiser valuing it at $ 6.5 billion.
Revolut and a spokesperson for SoftBank’s Vision Fund declined to comment on Saturday, while FT Partners could not be reached for comment.