Revolut Faces $15 Billion Valuation Cut by Key Shareholder

Monday, 24/04/2023 | 11:29 GMT by Damian Chmiel
  • Schroders slashes Revolut valuation by 46% to $17.7 billion.
  • The revised valuation reflects the deteriorating conditions of the fintech sector.
Revolut

One of Revolut's most steadfast investors, Schroders, has reduced the fintech giant's valuation by approximately $15 billion, marking a 46% write-down. This revaluation positions Revolut at $17.7 billion, a significant decrease from the $33 billion valuation following a funding round in July 2021.

Schroders Slashes the Valuation of Revolut's Shareholdings

Schroders' fund managers remain optimistic about Revolut's future, but its independent in-house valuation team determined the more conservative valuation.

The revised valuation was disclosed in a filing by Schroders Capital Global Innovation Trust, a listed investment trust managed by Schroders, according to The Times. The trust has reduced the estimated value of its Revolut stake from £10.115 million to £5.436 million as of 31 December 2022.

Founded in 2015 by Nik Storonsky and Vlad Yatsenko, Revolut began as a cross-border money transfer platform and has since expanded into consumer loans, crypto trading and even pet insurance. The London-based fintech firm boasts over 28 million global clients, employing over 6,000 individuals.

However, Revolut has faced recent hurdles, including a delayed application for a UK banking license and concerns raised by external auditor BDO regarding controls and procedures related to £477 million of its annual revenues in the group's 2021 accounts. Also, the company was forced to postpone its native cryptocurrency debut after the collapse of the FTX crypto exchange in November 2022.

Deteriorating Fintech Trends

Schroders' write-down is considerably more significant than the 15% devaluation applied by another investor, US-based TriplePoint Venture Growth, which values Revolut at $28 billion. The previous $33 billion valuation was established during a peak in enthusiasm for fintech stocks in July 2021 when Revolut raised $800 million from investors, such as Tiger Global Management and Softbank.

Other fintech companies have experienced significant devaluations recently, including Klarna, a Swedish "buy now, pay later" credit provider, which saw its valuation drop from $45.6 billion to $6.7 billion within a year. The decline in valuation came despite an increase of 21% in the company's 2022 revenue to $1.85 billion and an increase of 20% in net operating income to $1.6 billion.

Fintech funding across Europe and Asia slumped visibly in 2022, according to the newest industry data from Innovative Finance. January's report focused on the UK's fintech industry and showed a slump of 8% in overall funding on the Island and 30% worldwide. Global support for the sector shrank about 30% to $95 billion. The total number of completed investments fell from 6,146 to 5,263.

According to another report by CB Insights, global fintech funding slumped 46% to $75.2 billion in 2022. During the last quarter of the year, the industry generated $10.7 billion in funding, which is its lowest since 2018.

One of Revolut's most steadfast investors, Schroders, has reduced the fintech giant's valuation by approximately $15 billion, marking a 46% write-down. This revaluation positions Revolut at $17.7 billion, a significant decrease from the $33 billion valuation following a funding round in July 2021.

Schroders Slashes the Valuation of Revolut's Shareholdings

Schroders' fund managers remain optimistic about Revolut's future, but its independent in-house valuation team determined the more conservative valuation.

The revised valuation was disclosed in a filing by Schroders Capital Global Innovation Trust, a listed investment trust managed by Schroders, according to The Times. The trust has reduced the estimated value of its Revolut stake from £10.115 million to £5.436 million as of 31 December 2022.

Founded in 2015 by Nik Storonsky and Vlad Yatsenko, Revolut began as a cross-border money transfer platform and has since expanded into consumer loans, crypto trading and even pet insurance. The London-based fintech firm boasts over 28 million global clients, employing over 6,000 individuals.

However, Revolut has faced recent hurdles, including a delayed application for a UK banking license and concerns raised by external auditor BDO regarding controls and procedures related to £477 million of its annual revenues in the group's 2021 accounts. Also, the company was forced to postpone its native cryptocurrency debut after the collapse of the FTX crypto exchange in November 2022.

Deteriorating Fintech Trends

Schroders' write-down is considerably more significant than the 15% devaluation applied by another investor, US-based TriplePoint Venture Growth, which values Revolut at $28 billion. The previous $33 billion valuation was established during a peak in enthusiasm for fintech stocks in July 2021 when Revolut raised $800 million from investors, such as Tiger Global Management and Softbank.

Other fintech companies have experienced significant devaluations recently, including Klarna, a Swedish "buy now, pay later" credit provider, which saw its valuation drop from $45.6 billion to $6.7 billion within a year. The decline in valuation came despite an increase of 21% in the company's 2022 revenue to $1.85 billion and an increase of 20% in net operating income to $1.6 billion.

Fintech funding across Europe and Asia slumped visibly in 2022, according to the newest industry data from Innovative Finance. January's report focused on the UK's fintech industry and showed a slump of 8% in overall funding on the Island and 30% worldwide. Global support for the sector shrank about 30% to $95 billion. The total number of completed investments fell from 6,146 to 5,263.

According to another report by CB Insights, global fintech funding slumped 46% to $75.2 billion in 2022. During the last quarter of the year, the industry generated $10.7 billion in funding, which is its lowest since 2018.

About the Author: Damian Chmiel
Damian Chmiel
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About the Author: Damian Chmiel
Damian's adventure with financial markets began at the Cracow University of Economics, where he obtained his MA in finance and accounting. Starting from the retail trader perspective, he collaborated with brokerage houses and financial portals in Poland as an independent editor and content manager. His adventure with Finance Magnates began in 2016, where he is working as a business intelligence analyst.
  • 1527 Articles
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