Why Is Revolut Using Mysterious Lender’s ‘Liquidity Facility’?

Revolut’s limited funding line follows an investor value fall. It may launch a fintech funding trend. Revolut has been busy in 2023.

It deployed several new products, hired a new behavioral team to improve corporate culture, issued its long-overdue accounts, and recorded its first profits (for 2021).

It even seeks a new London headquarters. However, a large funding round is missing.

Revolut’s $800m Series E was scheduled to coincide with 2021’s venture capital bull market. Its $33bn valuation put it at the top of European fintech valuations.

It also ensured it didn’t need to return to capital markets in 2022 when the macroeconomic environment worsened each month and VC investment fell as interest rates rose.

The company hasn’t raised a round in two years. Why?

The corporation claims it’s now making sustainable earnings. However, its long-term sustainability is unproven and filed with Companies House, and more cash would help fund its massive growth ambitions.

Is the fintech giant considering alternate financing?

Revolut told me it has established a “liquidity facility” with a lender.

Revolut has yet to use its “modest” funding, according to a spokeswoman.

“Liquidity facilities can be used by financial services companies in line with regulatory liquidity guidance and this facility takes us above and beyond the liquidity guidance as a prudent measure,” they said.

“We have not drawn down any of the funds as they simply provide diversification in our contingency funding as we continue to grow globally,” they said.

A debenture, a legal security that gives the lender a long-term return on assets, secures the line of credit.

It was lodged at Companies House because credit lines and other facility arrangements usually involve a debenture to secure the lender.

Kroll anonymizes the lender in this arrangement.

Revolut needs the funds. Schroders, an investor, knocked it down 46% this week, along with Atom Bank (31%).

It recently said it was close the “finish line” in its long-term pursuit of a UK banking license.

Revolut’s new fundraising line won’t replace a round. It could be the final push.