Revolut Seeks to Borrow $250 Million Against Nik Storonsky's Shares
Revolut has proposed allowing Nik Storonsky to borrow up to $250 million against his stake in the company, a significant increase from the current limit of $50 million. This proposal is part of a governance overhaul known as Project Shasta.
Background:
- Storonsky owns approximately 29% of Revolut, which reached a $115 billion valuation in an employee secondary share sale last month.
- The current articles of association restrict employees with more than 20% of ordinary shares from pledging their shares as collateral for loans without board approval.
Proposed Changes:
- Increased Borrowing Limit: The new proposal would lift the borrowing cap to $250 million, removing specific limits on pledge proportions and expanding the types of shares that can be used as collateral.
- Board Approval Reduction: It would also eliminate the requirement for board approval on larger pledges.
Justification:
- Revolut argues that the current limit is outdated, given the company's significant growth since its founding in 2015 and recent valuation of around $115 billion.
- A person familiar with the changes stated that the new articles "do not reflect any borrowing that has taken place or any intention to borrow."
Implications:
- Even the proposed $250 million limit can be exceeded with board and 75% shareholder approval, a relatively low bar.
- The listing is anticipated after 2028, aiming for a $200 billion valuation in the US.
- Storonsky's incentive package is linked to this valuation target, potentially valuing his stake at around $80 billion. He is also negotiating a new award tied to a $500 billion valuation.
The liquidity aspect is significant, especially regarding a pending lawsuit against Storonsky involving fees on a €350 million superyacht.