- SoftBank-backed fintech Revolut has ruled out an IPO in 2022 as the fintech focuses on growth.
- The London-based startup will be keen to avoid the same fate as trading app Robinhood.
- IPOs have plummeted this year as geopolitical uncertainty and market corrections wreak havoc on publicly traded stocks.
Challenger bank Revolut has no plans to go public for at least another two years as it bids to build up revenues against a backdrop of plummeting tech valuations and interest rate hikes, sources said.
The $33 billion-valued fintech, which was backed by both SoftBank and Tiger Global last year, is best known for enabling users to spend money worldwide in 150 currencies at a real-time exchange rate with no fees through a debit card.
Nik Storonsky, the startup’s CEO and cofounder, played down an imminent public bow during a town hall meeting last month, according to two sources familiar with the matter.
Storonsky was asked about the company’s public ambitions during the meeting where he noted market conditions for such a move were poor and that Revolut would likely wait at least another two years.
Revolut declined to comment when contacted by Insider.
The company has yet to set a firm timeline on any listing plans but has previously spoken about the need to dramatically increase its revenue before going to market. Revolut needs to be at least in the “few billion dollars range of revenue a year,” Storonsky told Bloomberg during a TV interview in September.
The fintech posted a 57% increase in adjusted revenue in 2020 to £261 million ($325.8 million), according to its most recent accounts. Revolut competes with other challenger banks such as Monzo, Starling Bank, and N26 in Europe — and with offerings like Chime in the US.
2021 was a record year for IPOs with companies raising over $600 billion with the likes of dating app Bumble, Asian delivery startup Grab, and Rivian all going public. However, the unprecedented demand for public listings has not continued in 2022 with just 321 deals closed in the global IPO market in the opening quarter of the year, according to an analysis by EY. The slowdown in listings has been attributed to factors like geopolitical tensions and stock market
, as well as a correction in overvalued stocks.
The performance of 2021’s IPO cohort has been poor with stocks trading 20% down on their issue price, per data from Renaissance Capital Research. That included disappointments in the world of fintech with big declines from the much-hyped listings of companies like Robinhood, Wise, and Marqeta.
VC investors, particularly late-stage and crossover funds, are concerned about bloated valuations for private market companies that raised at record multiples during the COVID-19 pandemic. The scale of the issue was highlighted last month when Instacart cut its own valuation by 40% to $24 billion in an unusual response to the turbulence in public markets.
Revolut will be keen to avoid the same fate as stock trading app Robinhood, which has seen its valuation drop by over 70% to $8.74 billion since it went public in July.
“None of us want to be in the position of Robinhood employees, so we’re happy to hang tight,” one early Revolut employee told Insider on the condition of anonymity.
Robinhood lost $3.89 billion last year and recently laid off 9% of its employees having gone public at a $32 billion valuation, potentially offering a warning to late-stage businesses that push to go public while still loss-making.
Two early investors in Revolut and one early employee highlighted the need for the company to improve its offering in the lending market before the fintech could consider a public debut.
Storonsky recently said that lending, particularly mortgages, would be a focus in the near term and also pointed out that home loans “are quite an important part of consumer financial life,” Reuters reported.
One early Revolut investor told Insider that the company should be in “no rush” to list given current market conditions and also highlighted the relatively poor performance of recent UK IPOs like THG, Deliveroo, and Wise as a warning against moving too quickly. The company has been making strides in the US market too, having earmarked plans for more than a million users there, while the startup recently partnered with US embedded finance provider Cross River to offer loans Stateside.