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Revolut & Softbank Strike Deal to Remove UK License Barrier

News | Oct 6, 2023

Unsplash Sophie Dupau Revolut - Revolut & Softbank Strike Deal to Remove UK License Barrier

Image: Unsplash/Sophie Dupau

Revolut and SoftBank Seal Strategic Share Deal, Simplifying Ownership and Advancing UK Banking License Ambitions

Revolut has been in the spotlight, following its agreement to simplify its ownership structure alongside investor SoftBank, thereby eliminating a significant barrier to securing a banking license in the UK. Retuers reported that this move comes after months of negotiations between the two companies, with SoftBank demanding substantial compensation for relinquishing its priority class of shares.

Preference Shares Issue

The Bank of England had mandated Revolut to consolidate its six classes of shares into a single class as a prerequisite for a full license, which the company initially applied for over two and a half years ago. SoftBank, having led an $800 million funding round in 2021 that valued Revolut at $33 billion, sought compensation for forfeiting the protections attached to its share tranche.

This standoff was a primary reason behind the delay in Revolut obtaining a banking license.  The principle agreement, finalized last week, does not encompass any new issuance of "top-up" shares for SoftBank and will not exert a financial impact on the company.

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Other investors, including Tiger Global Management, venture capital firm TCV, Balderton Capital, and Ribbit Capital, have either agreed to transfer their shares into a single class or are in the concluding stages of discussions to do so1.

Revolut’s Prospective Growth

The Revolut-SoftBank deal exemplifies the intricate dance between fintech companies, investors, and regulatory bodies. As Revolut steps closer to obtaining its UK banking license and shakes off any other issues previously reported around internal cutlure.

This scenario underscores the importance of strategic partnerships, astute negotiations, and regulatory adherence in steering the course of fintech entities amidst the complex financial ecosystem.

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