Revolut hit with 40 per cent valuation write down amid banking licence woes
Revolut’s value has plunged by nearly 40 per cent over the past year as it struggles to win a banking licence and fails to provide full “visibility” on its accounts, according to a major investor in the firm.
London-based Revolut, run by Russian-British founder Nik Storonsky, bagged a $33bn valuation at the peak of the tech boom in 2021 when it won the backing of investment giants Tiger Global and Softbank.
However, the firm has faced a bruising two years since then in which it has failed to win a banking licence in the UK and faced questions over the veracity of its accounts earlier this year.
Revolut’s auditor BDO said it was unable to independently verify three quarters of the firm’s revenues in its 2021 accounts in March. Tech firms globally have also faced sharp falls in value as investors sour on high-growth firms.
In its full year results today, listed venture capital investor Molten Ventures said it had written down its holding in Revolut by forty per cent over the past year, slashing the value of its stake from £91.3m last year to £54.5m at the end of March.
Molten bought its Revolut stake at a discount to the $33bn valuation figure at its last fundraise. However, a wider 40 per cent write down would wipe out some $13bn from its last headline valuation figure.
The move follows a $15bn write down from investor Schroders earlier this year.
Boss Martin Davis told CityAM this morning that Molten Ventures “does not base its valuations on newspaper reports” but the market needed more clarity from the firm.
“We’re quite encouraged with the direction they’re taking. But the reality is, we all know that there are some proof points the market wants to see around increased revenues for 2022, to get a clean set of accounts 2022,” he said.
“They want to see visibility around profitability, they want to see visibility around the banking licence in the UK. I think once those proof points are hit, and we believe those proof points will be hit, then I think the valuation will will recover.”
The valuation cut comes amid a sharp slump globally as soaring inflation and sharp rate hikes turn investors away from high-growth tech firms.
Some of Europe’s most high profile tech unicorns have suffered sharp haircuts over the past year with Swedish firm Klarna suffering an 85 per cent plunge in its latest funding round.
Molten said its portfolio more broadly had fallen by 17 per cent to £1.37bn but the environment was “stabilising” for the period ahead.
“We are cautiously optimistic for the year ahead as the technology markets continue to stabilise and recover in places,” Davis said in a statement.
Revolut was contacted for comment.
This article was amended at 12:30 15/06/23 to reflect that Molten bought its stake at a discount to the $33bn valuation of Revolut’s last funding round.