Financial Services

Investor cuts Revolut’s valuation as fintech funding wanes

Schroders cuts internal valuation of Revolut stake by 46 per cent

Schroders cut its internal valuation of Revikut by 46 per cent. Photograh: JUSTIN TALLIS/AFP via Getty Images

Mon Apr 24 2023 - 09:44

A shareholder in Revolut has cut the value of its stake in the UK financial technology firm by 46 per cent, the latest indicator of how investor caution is impacting the fintech sector.

An investment trust managed by Schroders disclosed a £4.7 million (€5.3 million) writedown in its 2022 results published April 17. That brought the valuation of the stake held by Schroders Capital Global Innovation Trust to £5.4 million as of December 31, from £10.1 million a year earlier.

The writedown comes after the Telegraph reported last month that TriplePoint Venture Growth BDC had lowered the value of its stake in Revolut by 15 per cent. While Revolut’s delayed accounts showed the fintech firm made its first annual profit in 2021, its auditor said it was unable to satisfy itself on the “completeness and occurrence” of almost three-quarters of its revenue in 2021.

“We do not engage in speculation on our valuation,” Revolut said in an emailed statement. “Since our last funding round, in which we were valued at $33 billion, Revolut has continued to perform strongly in all its markets, has continued to hire and expand, and reported its first full year of profitability.”

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But a broader gloom has enveloped the start-up world since Revolut raised $800 million at the $33 billion valuation in 2021. The UK’s fintech sector saw investment drop $22 billion to $17 billion in 2022, as higher interest rates, inflation, and declines in valuations hit investor appetite.

Revolut chief executive Nikolay Storonsky said in July 2022, that Revolut was profitable and had enough funding for two years, allowing it to sidestep a gruelling period for fintech fundraising that’s seen rivals such as Klarna cut billions of dollars from their market value.

London-based Revolut applied for a UK banking license in 2021 and is still waiting for a decision from the Prudential Regulation Authority. The company is “nearly there” with gaining the license, chief financial officer Mikko Salovaara said last month.

A spokesperson for Schroders – which invested $13.7 million in Revolut in 2021 along with investors including SoftBank Vision Fund 2, according to earlier filings – declined to comment. The Times reported on the Schroders’ writedown earlier. – Bloomberg

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