Revolut’s rating makes no sense in relation to Lloyds.Nils Pratley

IRishi Sunak said he ran a Lala routine in the UK fintech sector and raised an additional $ 800million (£ 566million) to fund the expansion. And that’s what more capital and bold investors need for the UK scene. Good luck if the new money helps spread Revolut’s “Financial SuperApp” to the world.

But how is a company with a six-year history worth $ 33 billion, or £ 24 billion, as the investment terms of SoftBank and Tiger Global Management indicate? The rating is higher than NatWest, and the most notable comparison is probably the Lloyds comparison. Bank The group, the biggest beast in the British banking sector. Revolut is estimated to be worth 70% of Lloyd’s market value. what?

In the UK, Lloyds accounts for 19% of the mortgage market, 25% of credit card balances, 22% of current accounts, 19% of small business loans and 16% of consumer loans. In the “super” stakes, it is already there. Despite being hit by a pandemic last year, Lloyds still made a pre-tax profit of £ 1.22 billion. This year, the city expects a more normal amount of £ 5.4bn.

In contrast, Revolut recorded a total loss of £ 168million last year and ‘adjusted’ income grew at a steady rate of 57%, but that line was negligible compared to Lloyds. It amounted to £ 261million and consisted of £ 39million. “”“Raising the fair value of crypto assets” doesn’t seem like a reliable source of income every year.

The usual reaction to Eeyoreish’s complaints about FinTech’s rating is to scan the horizon and imagine the next global digital revolution in consumer credit. “Revolut’s speed of innovation has redefined the role of financial services,” said SoftBank. “We are in a good position to continue to expand into existing and new regions,” Tiger said.

Yes, yes, the overall angle is different, and yes, Revolut has expanded beyond the origins of the card to avoid Forex fees. However, its only banking license is in the Eurozone and has yet to be obtained in the UK, the largest market. While you can make hard-hitting growth predictions for years to come, financial services is a very competitive game where customers tend to be stubborn and existing businesses can spend a lot of money on fancy applications. This is also true.

Revolut was valued at $ 5.5 billion in the last funding round a year ago and is now six times as valuable. It cannot be explained in the event. The arrival of a simple fee from a panther trading cryptocurrency in the app is not a game-changer.

If some big investors want to dive over $ 800 million, of course you take their money. However, Revolut’s CFO Mikko Salovaara underestimated the problem when he called the funding environment “very powerful”. Wild is another explanation. The assessment is almost meaningless.

Avast should avoid slash prices

There is no other firm position in the FTSE 100 index, which is skyrocketing by foreign predators. In fact, cybersecurity specialist Avast does not fit into classic scripts. Based in Prague, it recently entered the London Stock Exchange in 2018. It is not a national treasure of Great Britain.

Likewise, however, Avast shouldn’t start at a broken price. This is the risk of the auction process of the American group NortonLifeLock. The potential terms are still unknown. It’s just the fact that there is an “advanced discussion”. This suggests that Avast itself is, in principle, open to trading.

However, it should be better than implied by the share price rise of just 18% on Thursday and Avast’s valuation of £ 6.1bn. Downloadable security software is clearly a growing market in the age of telecommuting, if that’s what we’re entering now. Avast’s kits are popular and the company has a more international reach than Norton. In this “freemium” model, not all 435 million users pay for the service, but the customer base is enormous.

Avast co-founders Pavel BaudiÅ¡ and Eduard Kučera together hold 35% of the capital, so there must be an incentive to bargain hard. However, there is a potential problem if you are more enthusiastic about acquiring Norton stock with an offer billed as “cash and stock” than outside shareholders. But the basic question is the price. Analysts in the city estimate £ 6bn to be around £ 1bn below fair value, and you can see why. Avast is going under the radar in London, but there aren’t many companies like it anywhere.