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Revolut has agreed to simplify its ownership structure with its biggest investor SoftBank, removing a hurdle for Britain’s most valuable fintech company to win a vital and long-delayed banking license in its home market.
Revolut and the Japanese investor have been locked in months-long negotiations, known internally as “Project Swan,” according to three people familiar with the matter.
The Bank of England has made the collapse of Revolut’s six-class shares – a legacy of multiple funding rounds since its founding in 2015 – a condition of granting the UK banking license it first applied for two-and-a-half years ago. The Bank of England’s supervisory authority is the lead agency for approving applications for banking licenses, which must also be signed off by the Financial Conduct Authority.
People familiar with the matter said the agreement in principle reached last week did not include any new “supplemental” shares from SoftBank and would not have a financial impact on the company.
That’s despite SoftBank initially asking for twice the number of common shares in exchange for giving up some of the priority it received from leading a funding round in 2021, making Revolut the most valuable private technology company in the UK.
SoftBank, the Bank of England and the FCA all declined to comment.
Revolut did not immediately respond to a request for comment.
Other investors — including Tiger Global Management, venture capital firm TCV, Balderton Capital and Ribbit Capital — have agreed to transfer their stakes into a single class or are in final negotiations, according to a person familiar with the matter. negotiation.
The four investors did not immediately respond to requests for comment.
In July 2021, SoftBank Vision Fund 2 led an investment of US$800 million, valuing Revolut at US$33 billion; after financial technology co-founder Nik Storonsky met SoftBank CEO Masayoshi Son, the company’s valuation increased by 80 One hundred million U.S. dollars.
Six months ago, Storonsky appealed directly to Son to break the impasse, arguing that the license was crucial for Revolut to justify and increase its high valuation, according to a previous report by the Financial Times. Without a license, the payments group cannot offer a full range of lending services or offer customers the security of the UK’s deposit insurance scheme.
Revolut has held a full EU banking license in Lithuania since 2021, but the UK is its largest market. Executives believe they need the legitimacy conferred by license approvals from major national regulators to help the company expand in the United States, Australia and Singapore.
While the resolution of Revolut’s complex, multi-tiered shareholding structure has provided a boost to Storonsky’s fight to secure a license, other hurdles remain.
Revolut’s failure to provide clean and timely financial accounts for its main corporate entities has been a bone of contention between the Bank of England’s Prudential Regulation Authority and the UK’s Financial Conduct Authority.
After being forced to issue eligible and overdue accounts for 2021, Revolut admitted last month that their 2022 accounts would also be delayed.
The fintech company was warned by regulators as a result, two people familiar with the matter said. The people added that now the company has assured them that they will finalize and submit the application without qualifications.
Revolut’s systems have also come under scrutiny. The company is in talks with the FCA, which already regulates its payments operations, after the breaches allegedly led to the release of up to £1.7 million in accounts flagged as suspicious by the UK’s National Crime Agency.
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