Fintech firm Revolut dealt £13bn writedown blow by Schroders

Revolut’s position as the UK’s most valuable fintech is in jeopardy after one of its most loyal shareholders wiped £13bn off the company’s valuation.

The hammer blow came from asset manager Schroders, who handed Britain’s largest fintech unicorn a 46 per cent write-down – suggesting its stake in Revolut was worth just £5.4m in December, down from £10.1m a years earlier.

The re-evaluation suggests that London-based Revolut could now be worth as little as £14bn – a far cry from the £27bn price tag it boasted in its latest round of funding in 2021.

This is the second blow to Revolut’s valuation by a top investor in recent months, after US-based Triple Point suggested its stake lost about 15 percent of its value, from £8.1m to £6.9m . This brought the company’s valuation to around £22 billion.

Revolut remains one of the biggest names in UK tech and has been championed by Chancellor Jeremy Hunt, who recently hailed it as a ‘brilliant’ success when he set out his vision of the UK as ‘the world’s next Silicon Valley’.

But the company has faced a lot of criticism in recent months, with the application for a banking license taking much longer than expected.

Regulators declined to comment on the progress of the permit, which has been more than two years in the making. But some critics have said regulators should avoid giving Revolut the go-ahead.

The All-Party Parliamentary Group (APPG) has warned that licensing Revolut would pose a risk to the UK banking sector.

Heather Buchanan, executive policy director for the APPG on Fair Business Banking previously said, “I would be utterly stunned if Revolut is welcomed with open arms and a blind eye to the licensed banking industry.

“We could let in a wolf in sheep’s clothing, and I don’t think that would end well for the sheep.”

In the UK, Revolut is regulated as an electronic money institution, which limits the products it can provide. For example, it cannot provide loans or lending services to its customers.

This is at odds with smaller rivals, including Monzo and Starling, which already hold UK banking licences.

Revolut also recently raised eyebrows after belatedly reporting its first annual profit last month, worth £26.3m in the year to December 2021

But in Revolut’s annual report, external auditor BDO warned that some of the information in the long-delayed 2021 accounts was “materially inaccurate”, stating it could not independently verify three-quarters of the £636m in revenue for the year.

The group was founded in 2015 by former Credit Suisse and Lehman Brothers trader Nik Storonsky, 38, and software expert Vlad Yatsenko, 39.

The company, which began offering prepaid exchange cards, now has 28 million customers worldwide and operates in more than 200 countries and regions.

Storonsky aims for the group to become the “Amazon of banking,” which has contributed to Revolut’s massive hiring boom.

The company has hired about 300 employees per month since last summer and has increased its total workforce from 2,900 in early 2022 to about 6,000 now.

But Revolut’s troubles have also been affected by the ongoing banking turmoil triggered by the collapse of Silicon Valley Bank in the US and the subsequent takeover of Credit Suisse by rival UBS.

The write-downs come as pink valuations are now coming back to bite some companies after a 2021 boom.

In its annual report, Schroders also downgraded three other privately held companies in its portfolio, including Atom Bank.

Danni Hewson, an analyst at AJ Bell, warned that the write-downs could have a huge impact on further rounds of funding – showing how lethargy towards growth companies is likely to persist in the future.

A Revolut spokesperson said: “We do not speculate on our valuation. Since our last round of funding, in which we were valued at $33 billion, Revolut has continued to perform strongly in all of its markets. The company has continued to hire and expand and report [a] first full year profitable.’