It seems there is no stopping Revolut these days. The neobank, or digital bank, has completed a fresh share sale at a valuation of $75 billion (€65 billion).
While it is not clear how much exactly Revolut raised in the latest round, it has been previously reported the bank was seeking to bring in about $3 billion. The new valuation is far in excess of the $45 billion it achieved just last year when it conducted a similar sale.
In a trend that is increasingly common for private companies, the fundraise allowed current employees to offload at least some of their shares to new investors. It is the fifth time Revolut has allowed staff to sell shares in such a way, and underlines the reality that Europe’s most valuable “start-up” – surely a redundant term at this point – is unlikely to go public any time soon.
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Traditionally, a company like Revolut would have floated on the stock market (via an initial public offering of shares) long ago. Now, with so many cash-rich investors looking for a piece of a hot company, there is no need to go public and deal with the additional red tape and disclosures that go with that.
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That is good for the company, but not necessarily the wider investment community or the bank’s customers. For all that company’s gripe about the extra requirements of being a public firm – quarterly reporting instead of filing annual accounts once a year, for example – the reality is that more disclosure is positive in the vast majority of cases.
Potential investors can make a more considered decision about putting money into a company as can a person considering whether to use (in this case) a Revolut account for their hard-earned money. For companies themselves, extra reporting forces more hard-headed decision making day-to-day.
The latest share sale also underlines the challenge facing the traditional banks in Ireland and elsewhere. At $75 billion, Revolut’s valuation is just about double the market capitalisation of AIB, Bank of Ireland and PTSB combined.
Unlike those three banks, Revolut doesn’t have the costs associated with maintaining a branch network, the legacy costs tied to the fallout from the financial crisis of more than a decade ago, or the fragile technology that has been built on repeatedly over decades.
It can go all-in on digital with the latest technology and not have to deal with political fallout around matters such as access to cash or ATMs.
It’s enough to stir some jealousy within Irish banking circles.
