Revolut investor cuts value of its stake by 40%
Molten Ventures, a technology investment firm listed in Dublin and London, has announced a significant 40% write-down of its stake in Revolut, to around $70 million in March 2023 from $115 million a year ago.
This deflation implies a reduced valuation of $19.8 billion, down from $33 billion the company was valued at after its last funding round, marking another dramatic markdown for a high-profile fintech startup. Still, the estimated valuation is higher than the $15 billion value placed on the company by asset manager Schroders in April.
Molten, holding a 5% stake in Revolut, becomes the latest investor to slash its investment value in the digital challenger bank. This follows similar actions taken by other investors, including Triplepoint Capital and Schroders, earlier this year. These markdowns indicate a downward reassessment of Revolut’s value, reflecting the challenges and uncertainties the company has faced in recent times.
Molten Ventures, formerly known as Draper Esprit, did not provide an explanation for the reduction in valuation, but the development comes amid a challenging period for Revolut. Its pursuit of a UK banking license faced a setback as the Bank of England is set to reject the highly valued fintech company’s long-standing application. This decision comes after a two-year campaign by Revolut to obtain the license.
The PRA cited concerns over Revolut’s balance sheet as the primary reason for the anticipated rejection. These concerns arose following a qualified audit opinion on overdue accounts that was released in the same month.
Britain’s most valuable start-up faced questions when its auditor revealed concerns over its long delayed 2021 accounts. BDO, the UK’s fifth largest accounting firm, said it had been unable to fully verify nearly £500 million of revenues, adding that “the risk of an undetected material misstatement was unacceptably high” due to the configuration of Revolut’s internal IT systems.
The challenger bank has responded to the auditors’ concerns, stating that they relate to revenues rather than the company’s balance sheet. However, it appears that the PRA remains unconvinced and is likely to proceed with rejecting the application based on its assessment of Revolut’s financial position.
Back in September, Revolut’s co-founder and CEO, Nik Storonsky, expressed confidence that the license was nearly secured. Similarly, in March, he reiterated that the license was expected to be granted “any day now.”
This development presents a significant challenge for Revolut, as obtaining a banking license is crucial for expanding its services and operating as a fully-fledged bank.
Revolut’s smaller competitors, such as Monzo and Starling, have successfully obtained banking licenses in the UK. They have gone through the same rigorous regulatory process set up by the relevant authorities to offer a broader range of financial services, including current accounts, savings accounts, and lending products.
