• Revolut valued at $45 bln in employee share sale
• Valuation exceeds that of Barclays, Natwest
• Storonsky's stake worth around $8 bln, Reuters calculations show
• Former banker launched Revolut in 2015

LONDON, Aug 22 (Reuters) - Revolut founder and CEO Nik Storonsky had a simple message for his employees at the company's summer drinks last year: make the financial technology firm bigger, better and beat the banks, a person who was there said.

The nine-year-old fintech business has now been valued at $45 billion after its employees sold shares to investors, surpassing in terms of worth some of Europe's biggest lenders, including Britain's 334-year-old Barclays (BARC.L) , opens new tab and NatWest (NWG.L) , opens new tab.

The deal cements London-based Revolut as Europe's most valuable start-up and is a vindication for 40-year-old Storonsky, coming weeks after he secured a UK banking licence following a three-year pursuit. The success positions Revolut to challenge established banks in more sectors, like mortgages.

Storonsky's stake in Revolut is now worth around $8 billion, according to Reuters calculations based on his shareholding disclosed in a document filed with Britain's corporate registry.

He was ranked 45th in the Sunday Times Rich List 2024, with a net worth of 4.38 billion pounds ($5.7 billion).

A former Lehman Brothers derivatives trader who also worked at Credit Suisse, Russian-born Storonsky left banking in 2013 to co-found Revolut, one in a wave of digital-only banking apps seeking to undercut mainstream lenders with lower-fee products.

The idea of the company came when, while travelling, he was dumbfounded by the high transaction fees and commissions levied by banks.

Since then Storonsky, who studied physics and maths in Moscow, has defied his critics, the struggles of rival fintechs and tough funding markets - Revolut's $45 billion valuation is a 36% jump on $33 billion in 2021.

The price is striking for a company which reported revenue of $2.2 billion last year, and the recent market downturn has demonstrated that lofty fintech valuations can fall fast.

Steve McLaughlin, founder of FT Partners and a banking adviser for Revolut on its 2021 fundraising, said he believed Revolut was worth $100 billion, in part because the total addressable market for financial services was vast.

"We did the analytics, we did the studies, we projected out to 2040 what the company would look like – and everyone thought it was overpriced (in 2021) but look who’s proven wrong," McLaughlin told Reuters.

Two sources familiar with Revolut said Storonsky had pushed in recent months for a $40 billion-plus valuation, telling bankers he would not accept any deal to cash in employee shares that was not an improvement on 2021.

Revolut declined to comment.

DETAILS AND DATA

The person at last year's drinks, a former employee, said Storonsky was obsessed with detail and data, eschewing long emails and formalities for a casually dressed, informal culture in which every employee could expect to be challenged by the CEO on calls. When in London, he works from his desk in the middle of Revolut's open-plan office, the person, who spoke on condition of anonymity, said.

However, Revolut's working culture has prompted criticism from past employees and the company has seen high staff turnover.

Storonsky has defended Revolut as a workplace and said it had learnt lessons. He brought in big names from mainstream finance like ex-Standard Life Aberdeen co-CEO Martin Gilbert as chairman and former Goldman Sachs banker Michael Sherwood.

A Revolut spokesperson told Reuters the company placed "enormous value on attracting, retaining and developing talented people". It has grievance processes that comply with local laws and are fair and transparent, the spokesperson said.

Storonsky has retained close control of performance through an internal team of about 15-20 people who report directly to him, the former Revolut employee said.

Mostly under 35 and recruited from banks or consultancies, they have been given powerful individual remits, like tackling underperforming departments, the person said.

BIGGER CHALLENGES

Delays in getting the UK banking licence after regulatory scrutiny over auditing issues - Revolut twice delayed publication of its full-year accounts - were a major setback for Storonsky.

He criticised Britain as a place to do business in a 2023 interview with The Times newspaper and said, in the event of a public listing, he would choose New York over London.

Bigger challenges for Storonsky and Revolut may lie ahead.

As the company expands into other sectors with its UK banking licence, it will invite increased regulatory scrutiny.

Consumer watchdogs have criticised Revolut's record versus rivals in reimbursing UK customers hit by fraud. Revolut has said it takes fraud and scams "incredibly seriously" and has robust protections in place.

For staff, particularly those who joined Storonsky in the early years, the rewards have been immense, turning many current and former employees into multi-millionaires on paper.

Storonsky said last week he was delighted employees could realise the company's collective success when they sold $500 million of shares.

What is less clear is how much the recent achievements and Storonsky's ambition will accelerate plans for a stock market listing, in the United States or in London.

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https://www.reuters.com/markets/europe/revoluts-storonsky-takes-big-step-forward-battle-with-banks-2024-08-22/