Revolut, the British digital bank, has ruled out an initial public offering in the near future as it targets another private fundraising later this year.
In an interview with Financial News, Nikolay Storonsky, founder and chief executive of Revolut, said the firm needs to hit a valuation of $20bn-$40bn before a stock market float.
“We are still very tiny to do an IPO. We need to be in the range of 20, 30, 40 billion [dollars] even to start considering it,” Storonsky said.
A float of this scale would place Revolut in the company of some of the world’s largest technology stocks, such as ride-hailing apps Lyft and Uber, which listed on the New York Stock Exchange at valuations of $24bn and $82bn, respectively, this year.
Helal Miah, investment research analyst at The Share Centre, the retail stockbroker, says the target is a tall order. “Although I firmly believe that growth in these businesses can be exponential, starting from a fairly low base, I still think it’s a big ask to reach those sort of valuations.”
Funding Circle, the peer-to-peer lending platform, became the first big UK fintech firm to go public in September 2018, raising £300m at a valuation of £1.5bn. The lender’s shares are currently trading at around 260p, significantly below the listing price of 440p.
Storonsky’s comments come after six months of intense scrutiny for the start-up, which has drawn criticism over a cut-throat corporate culture, compliance lapses and alleged links to the Kremlin.
If his plan succeeds, Revolut will join the ranks of tech start-ups that are staying private, often supported by mammoth investment from backers such as the $100bn SoftBank Vision Fund. Revolut held talks with SoftBank last year, according to a person familiar with the matter, but the start-up was not fundraising at the time.
Tim Levene, chief executive of Augmentum Fintech, the listed fintech investment fund, said that “companies are choosing not to go public because there are so any other routes at that later stage for growth capital”.
Revolut is plotting its next private fundraising for the third or fourth quarter of this year. According to Storonsky, it has already fielded an offer that would cause its valuation to climb “much higher” than Europe’s current most valuable fintech firm, TransferWise. The payments company achieved a $3.5bn valuation through a secondary share sale to BlackRock, the world’s largest asset manager, and other investors in May 2019.
But the Revolut boss acknowledges that few investors have the muscle to support his firm’s growth.
Revolut has been growing fast, hiring 504 people in the last three months, including dozens of former Uber staff in senior operations roles across the business. The start-up had 9,000 job applications in May, up 300% on January 2019.