Revolut to Increase the Limit on Third-Party Loans Secured by Shares Fivefold — FT

The British fintech company Revolut has proposed increasing fivefold the amount that its co-founder and CEO, Nick Storonsky, can borrow against his stake—up to $250 million, the Financial Times (FT) has learned. Last week, Europe’s most valuable startup sent a letter to investors asking them to approve this change and also proposed waiving the requirement for the board of directors to approve larger share pledges, the newspaper reports.

According to Revolut’s documents, employees who own more than 20% of the company’s common stock can now pledge up to 10% of their stake as collateral for loans from other banks without the board of directors’ approval, the Financial Times reports. According to the report, only Storonsky currently meets the 20% threshold. An additional 5% of the stake can be pledged with the support of a majority of the board members. The current version of the articles of association limits the amount of loans Storonsky can take out using his shares as collateral to $50 million, the FT explained.

The proposed new rules would raise the borrowing limit to $250 million and remove restrictions on the percentage of shares that can be pledged as collateral. This would give the Third Party more flexibility to monetize its stake without having to sell shares. The changes will also expand the categories of securities that can be used as collateral, the FT notes.

Revolut told the FT that it regularly updates its articles of incorporation to ensure that its corporate governance aligns with the current scale of its business: “The current update covers a number of technical and administrative provisions. These include an update to the share pledge limit, which replaces the outdated threshold with a fixed maximum; meanwhile, any borrowing continues to be subject to existing regulatory requirements.”

The previous borrowing threshold was set years ago, and the $250 million limit represents an “extremely low” bar for Storsky’s stake, one of the FT’s sources noted. He added that the new version of the charter “does not reflect any borrowings that have already been made or any intentions to take out a loan.”

The FT notes that these changes are being proposed against the backdrop of Revolut’s rapid rise in valuation, which has significantly increased Storsky’s personal fortune, making him one of the wealthiest people in the UK. The vast majority of his wealth is tied up in the fintech company’s shares: according to a source cited by the newspaper, the billionaire owns approximately 29% of Revolut’s shares. The company’s pre-tax profit last year more than doubled to 1.7 billion pounds ($2.3 billion) on revenue of 4.5 billion pounds ($6 billion), and its customer base reached 75 million people.

Revolut was valued at $115 billion as part of a secondary share sale by employees in July. Revolut expects to reach a valuation of $200 billion by the time of a potential IPO, which, according to management, will take place no earlier than 2028, the FT reported.

Storonsky noted that his incentive plan could increase his stake to approximately 40% if Revolut reaches a valuation of $200 billion. In that case, his stake would be worth about $80 billion. Storonsky is also negotiating a new agreement that could increase his stake even further if Revolut’s valuation reaches $500 billion, according to sources cited by the Financial Times.

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