VC firm Molten Ventures has reportedly written down its current holding in digital banking platform Revolut by a sizeable 40%. This move is adding to the Fintech firm’s recent challenges as it struggles to obtain a UK banking license.
Molten Ventures has discounted the value of its significant £7 million stake in Revolut from £91.3 million in March 2022 to just £54.5 million at the end of March 2023. This is according to Molten’s annual report, which shows several other investments receiving a slash in valuation.
The document described Revolut’s business as follows:
“Revolut is a global financial services company that specialises in mobile banking, card payments, money remittance, and foreign exchange. Revolut continues to reach new heights as the consumer fintech app surpasses 28m customers globally, processing over 250m transactions per month. The company supports banking services in over 200 countries/regions across 29 currencies. Revolut announced profitability for 2021 posting £40m in profits for the period. Over 2022 they expanded into new locations across the Americas, Europe and Asia. Revolut is also looking to expand their business customer offering which has over 500k users.”
Like many other industry participants, Molten Ventures has been faced with a difficult year during the considerable technology stock sell-off, reporting a fairly large £243 million loss in a trading update shared on Wednesday as against a £301 million profit for the full-year 2022.
In a report, Company Chief Executive Martin Davis said the past year has seen a shift in the investing environment, especially in tech. High interest rates due to inflation is a part of the problem.
“This challenging market backdrop has led to a reduction in the value of our portfolio, and our focus for this year has been centred on the active management of our investments while adapting our business to respond positively in the face of market pressures.”
He added that:
“While economic uncertainties persist, we are beginning to see signs of stabilisation. Molten Ventures is well positioned to manage through the downturn and to respond to any recovery, while capitalising on opportunities in the market that enable us to deliver value for Shareholders.”
Davis also mentioned that the write-down in Revolut has been made after recent concerns regarding the Fintech company’s struggles to acquire a UK banking license and the journey to achieve profitability.
Revolut has notably been seeking a UK banking permit for the past couple years. But recent reports indicate that its application might be denied as regulatory authorities point to concerns regarding the firm’s balance sheet.
After a 6-month delay, Revolut had filed its accounts back in March. But auditor BDO had identified various concerns such that it was not able to reliably verify £477 million in revenue, nor support their “completeness or occurrence”, because of the overall configuration of the Fintech company’s internal IT systems.
Molten Ventures’ recent write-down comes after a fairly similar downgrading by Schroders, which had devalued its stake in the company by about 45% back in April 2023.
