[ad_1]
Receive free Revolut Ltd updates
We’ll send you a myFT Daily Digest email rounding up the latest Revolut Ltd news every morning.
Revolut has agreed to simplify its ownership structure with its largest investor SoftBank, removing one obstacle faced by the UK’s most valuable fintech to win a vital and long-delayed banking licence in its home market.
Revolut and the Japanese investor had been locked in months of negotiations — internally codenamed “Project Swan” — with SoftBank demanding stiff compensation for giving up its priority class of shares, according to three people familiar with the matter.
The Bank of England has made collapsing Revolut’s six classes of shares — the legacy of multiple funding rounds since it was founded in 2015 — one condition for granting a UK banking licence, which Revolut first applied for more than two-and-half years ago. The BoE’s regulatory arm is the lead agency for approving banking licence applications, which must also be signed off by the Financial Conduct Authority.
The agreement in principle struck last week does not include any new issuance of “top-up” shares for SoftBank, nor will it have a financial impact on the company, the people familiar with the situation said.
That is despite SoftBank initially demanding as much as twice the amount of common stock in exchange for giving up some of the preferential rights it received for leading a 2021 fundraising round, which made Revolut the UK’s most valuable private tech company.
SoftBank, the BoE and the FCA declined to comment.
Revolut did not immediately respond to requests seeking comment.
Other investors — including Tiger Global Management, venture capital firm TCV, Balderton Capital and Ribbit Capital — have all either agreed to transfer their shares into a single class, or are in final talks to do so, said one person familiar with the deal negotiations.
The four investors did not immediately respond to requests seeking comment.
SoftBank’s Vision Fund 2 led an $800mn fundraising in July 2021 that valued Revolut at $33bn; a valuation boosted by $8bn after a meeting between the fintech’s co-founder Nik Storonsky and SoftBank chief Masayoshi Son.
Storonsky appealed directly to Son six months ago to break the deadlock, arguing that a licence was essential for Revolut to justify and grow its lofty valuation, the FT has previously reported. Without a licence, the payments group cannot offer a full suite of lending services nor offer customers the security of the UK’s deposit insurance scheme.
Revolut has held a full EU banking licence in Lithuania since 2021 but the UK is its biggest market. Executives believe they need the legitimacy conferred by the licence approval from a major national regulator to help the company expand in the US, Australia and Singapore.
While the resolution of Revolut’s complex multi-tier share structure is a boost for Storonsky in his struggle to get a licence, other hurdles remain.
Revolut’s failure to produce clean and timely financial accounts for its main corporate entity has been a persistent bone of contention with the BoE’s Prudential Regulation Authority and the FCA.
After being forced to issue qualified and late accounts for 2021, Revolut admitted last month their 2022 accounts would also be delayed.
The fintech was admonished for this by regulators, two people familiar with the situation said. Now the company has reassured them they will be finalised and submitted without qualifications, those people added.
Revolut’s systems have also come under scrutiny. The company is in talks with the FCA, which already regulates its payment business, about failures that allegedly allowed as much as £1.7mn to be released from accounts flagged as suspicious by the UK’s National Crime Agency.
The picture caption on this story has been corrected to make clear Nik Storonsky is co-founder of Revolut.
[ad_2]
Source link