Revolut has proposed increasing the borrowing limit for its founder, Nik Storonsky, allowing him to secure up to $250 million against his equity stake in the fintech giant.
The proposal represents a five-fold increase from the current borrowing cap of $50 million. The move would provide Storonsky with significant personal liquidity without requiring him to sell shares in the private company.
The details emerged as part of internal discussions regarding founder compensation and financial flexibility. Such arrangements are common among founders of high-valuation private companies who wish to access capital while maintaining their ownership percentage and voting control.
By borrowing against his shares, Storonsky can obtain cash for personal investments or expenditures while keeping his equity intact. This avoids the tax implications and the perceived negative market signal that often accompanies a founder selling a significant portion of their holdings.
However, equity-backed loans carry inherent risks. If the valuation of Revolut were to drop sharply, lenders could trigger a margin call, requiring the founder to provide more collateral or repay the loan immediately.
Revolut Valuation and Regulatory Hurdles
The timing of this proposal comes as Revolut continues to navigate a complex regulatory environment, particularly in its home market of the United Kingdom. The firm has spent several years pursuing a full UK banking licence from the Prudential Regulation Authority.
Securing this licence is critical for Revolut to expand its product offering and lower its cost of funding. A full licence would allow the company to operate more like a traditional bank, offering a wider range of lending products and absorbing more deposits.
The company’s valuation has remained a focal point for investors. In recent secondary share sales, Bloomberg and other financial outlets have noted that the firm has been valued at figures exceeding $33 billion, making it one of the most valuable fintech companies globally.
This high valuation provides the necessary collateral for a $250 million loan. Because the loan is a fraction of Storonsky’s total stake, the loan-to-value ratio remains conservative, reducing the immediate risk of a margin call unless a catastrophic valuation collapse occurs.
The proposal must be vetted through the company’s governance structures. Board approval is typically required for such arrangements to ensure they do not conflict with the interests of other shareholders or violate any regulatory requirements regarding executive loans.
Industry analysts suggest that providing founders with liquidity can reduce the pressure on them to push for an early initial public offering (IPO) simply to cash out. This allows the management team to focus on long-term growth and regulatory compliance rather than short-term exit strategies.
Revolut has grown rapidly from a digital challenger bank into a global financial super-app, offering everything from cryptocurrency trading to insurance and stock brokerage.
The company will now move to finalise the terms of the borrowing limit, pending final approval from the board of directors and adherence to internal compliance protocols.
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