Revolut was last valued at US$33 billion in July 2021. It was another era – one in which VC money still flowed freely, interest rates were low, and a slew of disappointing IPOs by overhyped tech companies had yet to occur.
Revolut wisely has held off going public, realizing that there is a high risk that the exit would be unsatisfactory for investors. Instead, it is focusing on becoming a profitable business.
However, having finally been granted a UK banking license – with a few caveats – Revolut seems to be feeling especially confident. The company reportedly preparing a share sale that would value it at US$45 billion. It would achieve that valuation by selling approximately US$500 million in employee-owned shares, according to The Wall Street Journal. That is a lofty valuation given Revolut’s current financials. It is roughly 17 times Revolut’s revenue in the 12 months through March, compared to eight times for NYSE-listed Nubank and about two times for PayPal.
Alternatively, consider that Singapore’s United Overseas Bank (UOB) has a market capitalization of about US$38.5 billion. It recorded a profit of US$4.5 billion in 2023. Revolut’s 2023 profit was about 1/8 of that, and yet it is seeking a valuation that is almost US$7 billion higher.
Meanwhile, Revolut’s success in obtaining a UK banking license will probably have a limited impact on its expansion in the Asia-Pacific region outside of Australia and New Zealand. Given the different fintech segments Revolut is exploring in Singapore and India, the UK banking license is less directly relevant for its business in those two countries.
We expect that the UK fintech unicorn will continue to expand incrementally in the city-state, while India could prove difficult for Revolut to penetrate. In India, Revolut has to prove that it can cater to the needs of a large, diverse emerging market. The jury is still out on whether Revolut can create a compelling value proposition for Indian customers given the plethora of competition and regulatory hurdles it faces there.