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Revolut valued at $45 bln in employee share sale

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Valuation exceeds that of Barclays ( JJCTF ), Natwest ( NWG )

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Storonsky's stake worth around $8 bln, Reuters

calculations show

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Former banker launched Revolut in 2015

By Tommy Reggiori Wilkes, Amy-Jo Crowley

LONDON, Aug 22 (Reuters) - Revolut founder and CEO Nik

Storonsky had a simple message for his employees at the

company's summer drinks last year: make the financial technology

firm bigger, better and beat the banks, a person who was there

said.

The nine-year-old fintech business has now been valued at $45

billion after its employees sold shares to investors, surpassing

in terms of worth some of Europe's biggest lenders, including

Britain's 334-year-old Barclays ( JJCTF ) and NatWest ( NWG ).

The deal cements London-based Revolut as Europe's most valuable

start-up and is a vindication for 40-year-old Storonsky, coming

weeks after he secured a UK banking licence following a

three-year pursuit. The success positions Revolut to challenge

established banks in more sectors, like mortgages.

Storonsky's stake in Revolut is now worth around $8 billion,

according to Reuters calculations based on his shareholding

disclosed in a document filed with Britain's corporate registry.

He was ranked 45th in the Sunday Times Rich List 2024, with

a net worth of 4.38 billion pounds ($5.7 billion).

A former Lehman Brothers derivatives trader who also worked

at Credit Suisse, Russian-born Storonsky left banking in 2013 to

co-found Revolut, one in a wave of digital-only banking apps

seeking to undercut mainstream lenders with lower-fee products.

The idea of the company came when, while travelling, he was

dumbfounded by the high transaction fees and commissions levied

by banks.

Since then Storonsky, who studied physics and maths in

Moscow, has defied his critics, the struggles of rival fintechs

and tough funding markets - Revolut's $45 billion valuation is a

36% jump on $33 billion in 2021.

The price is striking for a company which reported revenue of

$2.2 billion last year, and the recent market downturn has

demonstrated that lofty fintech valuations can fall fast.

Steve McLaughlin, founder of FT Partners and a banking

adviser for Revolut on its 2021 fundraising, said he believed

Revolut was worth $100 billion, in part because the total

addressable market for financial services was vast.

"We did the analytics, we did the studies, we projected out

to 2040 what the company would look like - and everyone thought

it was overpriced (in 2021) but look who's proven wrong,"

McLaughlin told Reuters.

Two sources familiar with Revolut said Storonsky had pushed

in recent months for a $40 billion-plus valuation, telling

bankers he would not accept any deal to cash in employee shares

that was not an improvement on 2021.

Revolut declined to comment.

DETAILS AND DATA

The person at last year's drinks, a former employee, said

Storonsky was obsessed with detail and data, eschewing long

emails and formalities for a casually dressed, informal culture

in which every employee could expect to be challenged by the CEO

on calls. When in London, he works from his desk in the middle

of Revolut's open-plan office, the person, who spoke on

condition of anonymity, said.

However, Revolut's working culture has prompted criticism

from past employees and the company has seen high staff

turnover.

Storonsky has defended Revolut as a workplace and said it had

learnt lessons. He brought in big names from mainstream finance

like ex-Standard Life Aberdeen co-CEO Martin Gilbert as chairman

and former Goldman Sachs banker Michael Sherwood.

A Revolut spokesperson told Reuters the company placed

"enormous value on attracting, retaining and developing talented

people". It has grievance processes that comply with local laws

and are fair and transparent, the spokesperson said.

Storonsky has retained close control of performance through

an internal team of about 15-20 people who report directly to

him, the former Revolut employee said.

Mostly under 35 and recruited from banks or consultancies,

they have been given powerful individual remits, like tackling

underperforming departments, the person said.

BIGGER CHALLENGES

Delays in getting the UK banking licence after regulatory

scrutiny over auditing issues - Revolut twice delayed

publication of its full-year accounts - were a major setback for

Storonsky.

He criticised Britain as a place to do business in a 2023

interview with The Times newspaper and said, in the event of a

public listing, he would choose New York over London.

Bigger challenges for Storonsky and Revolut may lie ahead.

As the company expands into other sectors with its UK banking

licence, it will invite increased regulatory scrutiny.

Consumer watchdogs have criticised Revolut's record versus

rivals in reimbursing UK customers hit by fraud. Revolut has

said it takes fraud and scams "incredibly seriously" and has

robust protections in place.

For staff, particularly those who joined Storonsky in the

early years, the rewards have been immense, turning many current

and former employees into multi-millionaires on paper.

Storonsky said last week he was delighted employees could

realise the company's collective success when they sold $500

million of shares.

What is less clear is how much the recent achievements and

Storonsky's ambition will accelerate plans for a stock market

listing, in the United States or in London.

($1 = 0.7676 pounds)

(Additional reporting by Krystal Hu and Tom Wilson; Editing by

Emelia Sithole-Matarise)