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Revolut's Secondary Share Sale and Potential IPO
Revolut, the digital banking disruptor, has recently announced a secondary share sale, pushing its valuation up to an impressive $75 billion. This move comes amidst speculation about the company's potential Initial Public Offering (IPO), with many suggesting that a New York stock market debut could be on the horizon.
The secondary share sale, backed by investors including Balderton Capital, Index Ventures, and Ribbit, allows Revolut employees to sell up to 20% of their personal holdings. Payouts for employees selling shares are expected imminently as the sale process is currently ongoing. The sale prices each share at US$1,381.06.
Nik Storonsky, Revolut's founder and CEO, earned US$200m-US$300m from a separate share sale last summer. Storonsky's potential earnings could significantly increase if Revolut reaches a valuation of US$150bn, a multibillion-dollar fortune.
In December 2023, Storonsky suggested that New York might be a better location for an IPO due to the regulatory environment and market size. A potential IPO in New York could represent a shift in Revolut's strategic focus towards a more favorable regulatory environment.
The company's strong financial performance in 2024 supports this shift. Revolut's annual profits more than doubled to £1bn, driven by growth in subscriptions and revenue from the wealth and crypto trading divisions.
However, the delay in obtaining a full banking license in the UK may have contributed to the speculation about Revolut's stock market debut being delayed. Revolut has waited three years for initial approval and has since remained on a restricted UK banking license. The delay may have also led to concerns about the UK regulatory process, with the share sale potentially signaling a lack of confidence in the system.
Chancellor Rachel Reeves sought meetings with regulators amid the delay, but Bank of England Governor Andrew Bailey blocked the meetings, citing concerns over potential government interference in an independent process.
If Revolut does decide to go public, it could be a blow to the City and the London Stock Exchange, which have seen a growing number of defections. The company has addressed previous accounting issues, EU regulatory breaches, and concerns over its corporate culture, suggesting that it is now in a position to make a successful transition to the public market.
A spokesperson for Revolut stated that the company regularly provides opportunities for employees to gain liquidity, adding to the speculation that the recent share sale could indicate that an IPO is imminent. Kathleen Brooks, Research Director at online broker XTB, shares this sentiment, believing that the share sale could indicate that Revolut is planning to IPO soon or that its employees are eager for an IPO due to the lack of one.
Payouts from the sale are expected in early autumn, adding to the anticipation surrounding Revolut's potential IPO. Whether it happens in New York or London, one thing is certain: Revolut's move into the public market will be a significant event in the world of digital banking.
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