One of Revolut’s most loyal investors has slashed the value of the company by about $15 billion, due to a more conservative assessment of financial technology stock.
Schroders’ 46 percent writedown implies that Britain’s largest fintech unicorn, formerly valued at $33 billion by a capital raising in July 2021, is now worth about $17.7billion.
The in-house team of Schroders’ valuation department, independent from the stockpickers, took a more conservative view.
Schroders Capital Global Innovation Trust (a listed investment trust run by Schroders) revealed the change in heart when it filed a report. It had reduced its estimated value of Revolut’s stake from £10.115 to £5.436 as of December 31, last year.
Jeremy Hunt praised Revolut in January, a privately-owned fintech company based in London.
Nik Storonsky founded the company in 2015 with Vlad Yatsenko. It began as a platform for cross-border money transfers, but it has expanded into many other areas such as cryptocurrency trading and consumer loans. The company claims to have more than 28 millions customers in over 100 countries, including six million people in the UK. It also employs over 6,000 employees.
Recent challenges have caused the application for a UK banking license to take longer than anticipated. BDO, its external auditor, also expressed concerns over the controls and procedures that underlie about £477million of the group’s annual revenues. The accounts for 2021 were filed with Companies House last month after a slight delay.
TriplePoint Venture Growth, a US-based investor, reduced its stake’s valuation by 15%. This would put it at $28 Billion.
Revolut raised $800,000,000 from investors such as Softbank and Tiger Global Management in July 2021. This was at the height of fintech stock enthusiasm. Storonsky was the chief executive of Revolut. Some employees sold shares during the fundraising.
Klarna is a Swedish fintech that offers “buy now, pay later” credit. It raised capital for $45.6 billion in June 2021, only to return to its investors one year later to raise new capital valued at $6.7 billion.
Schroders Capital Global Innovation Trust was the old Woodford Patient Capital Trust. It was given to Schroders for management and renamed following the collapse of Neil Woodford’s investment empire in 2019 The Schroders Trust was relatively new to Revolut. However, other funds managed Schroders have supported the company from its first capital raising.
Last week, the trust changed its name from Schroder UK Public Private Trust in order to emphasize unlisted investments. The trust has reduced the value of Atom Bank from £46.2 to £31.7.
Revolut’s source claimed that Schroders did not have the latest financial results of the fintech group for the past year or for the first quarter in 2023, because Revolut’s last set of public accounts was for 2021.
Sources claim that Revolut has seen its sales increase despite its valuation multiple falling since its last funding almost two years ago. The fintech company reported total revenues of £636 millions for 2021, and that its revenues exceeded £850 million in 2018.
Schroders Trust previously outsourced its valuations to Link, a fund management administrator. However, it has now taken the process on-site. The Financial Conduct Authority severely criticized Link for its work with Woodford.
Revolut is headed by former Aberdeen Asset Management Chief Martin Gilbert. He has indicated that the company plans to go public at some point. Storonsky, son of a Russian-Ukrainian mother, spoke out against the conflict in Ukraine and called it “totally abominable”. Revolut suspended its operations in Russia and Belarus.
Revolut’s spokesman stated: “We don’t speculate on our valuation.” Revolut, which was valued at $33billion in our last funding round has performed well in all of its markets. It has also continued to expand and hire, as well as reporting its first year of profitability.