Revolut in talks with SoftBank about funding at £21bn valuation

Revolut, the British-based banking and payments app, is in detailed talks with the world’s largest technology fund about a fundraising that could value it at well over $30bn (£21.7bn).

Sky News has learnt that SoftBank’s Vision Fund 2 is one of a small number of investors which have been asked by Revolut and its advisers to submit proposals in recent weeks for an investment of between $750m (£542m) and $1bn (£723m).

If completed, the transaction would instantly transform Revolut into one of the most valuable fintech companies ever launched in Europe.

Industry sources said the prospective investment was being discussed at a valuation of between $30bn and $40bn (£28.9bn), with a formal deal said to still be some weeks away.

SoftBank’s inaugural Vision Fund, which backed companies including Uber Technologies, owner of the ride-hailing platform, the buy-now-pay-later platform Klarna, has held discussions with Revolut in the past but failed to reach a deal.

The identity of the other funds in talks with Revolut was unclear this weekend, although the size of the prospective investment means that only US-based firms such as Tiger Global Management or Dragoneer Investment Group are likely to be under consideration.

One source said that 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 so given that shareholders had been primed to expect its next capital-raising to value it at somewhere between $10bn and $15bn as recently as three months ago.

Sky News reported the $10bn-$15bn aspiration in mid-April, while Bloomberg News reported last month that a deal could see Revolut valued at more than $20bn.

Only last year, Revolut raised money from the US-based investors TCV and TSG Consumer Partners at a valuation of $5.5bn (£3.98bn).

The new talks 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, which saw it valued at $45.6bn, is said to have been a factor in Revolut’s ability to target a far higher valuation.

The latest developments will fuel questions about the ability of loss-making technology companies to attract price tags in excess of all but the largest publicly listed companies.

Even at the lower end of its mooted $30bn-$40bn range, Revolut would be worth more than almost 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 – fuelled in part by the recent deluge of US-listed special purpose acquisition companies (SPACs).

Nik Storonsky, the company’s founder and chief executive, said recently that the company was in the early stage of talks about raising further funds while pointing out that it was not in need of additional capital.

Last month, Revolut disclosed losses in 2020 of just over £200m as its rapid growth saw staff costs increase substantially.

It said it was profitable in the final two months of the year.

Mr Storonsky would become a paper billionaire several times over if the latest fundraising talks are successful.

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Revolut, which now has a presence in 35 countries and more than 15 million customers, is in the process of applying for a UK banking licence that will allow it to take deposits in its home market.

It is chaired by the City veteran Martin Gilbert, while the former Goldman Sachs International co-chief executive Michael Sherwood also sits on its board.

The company recently introduced an equity participation plan for its 2200 employees, which would see their stakes worth substantial sums at the latest valuation.

It has struggled with significant compliance issues and wave of executive departures but is said to be confident that it has largely addressed historic flaws in its systems.

Mr Storonsky recently said he was working on expansion plans that included India, Latin America and South Korea.

The current fundraising talks are likely to spur speculation about when – and where – Revolut might eventually choose to become a public company.

Chancellor Rishi Sunak has backed a series of proposals to improve the UK’s listings regime for fast-growing tech companies.

A review by Ron Kalifa, the former Worldpay chief, recently recommended changes to UK listing rules and a new growth fund to help ensure Britain’s leadership in the global fintech industry.

The UK’s other highly valued fintechs include Wise, the payments service, which is about to list in London with a valuation of well over £5bn.

FT Partners, the US-based fintech-focused investment bank which recently advised the French insurer Mollie on an $800m fundraising valuing it at $6.5bn.

Revolut and a spokesman for SoftBank’s Vision Fund declined to comment on Saturday, while FT Partners could not be reached for comment.

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