US investor revives controversial Revolut share offer after FCA setback

A US private equity firm is mounting a second effort to grow its stake in Revolut at a heavy discount after its previous offer was scuppered by the City regulator, City AM can reveal.

Jamba Europe, effectively owned by New York-based HOF Capital, has relaunched an offer to buy a “substantial volume” of shares from nearly 3,500 Revolut investors via the Republic Europe private trading platform, according to a letter seen by City AM.

Republic, formerly known as Seedrs, cancelled Jamba’s original offer on 24 October following pushback from the Financial Conduct Authority (FCA).

The FCA previously ruled that communication around the offer could be seen as a “financial promotion”, which would need specific regulatory approval.

Republic’s new letter advertising the offer to shareholders was an “approved financial promotion”, a person familiar with the matter said. The FCA declined to comment.

Jamba is soliciting offers through Republic until 4 November and, like its previous plan, would buy shares starting at the lowest price in a reverse price auction, the letter said.

Again, Republic said in the letter that Jamba considers £407.86 per Revolut share a “reasonable reflection of the current market price”, based on previous rounds of trading on the platform.

But shareholders in the London-based banking app have criticised the move given its roughly 38 per cent discount compared to an August employee share sale, which landed Revolut an implied valuation of $45bn.

Republic’s new letter removes any mention of the August sale, which was brokered by Morgan Stanley and launched at a price of $865.42 per share.

The original letter had also referenced an expected capital gains tax raid in Wednesday’s Budget, which some Revolut investors considered “opportunistic”.

Revolut has concerns about the offer, including its discount and “predatory” use of Budget tax fears, a person familiar with the matter said. Revolut declined to comment.

One Revolut shareholder told City AM that given the lack of liquidity on the Republic platform, it would be “nonsense to imply” £407.86 accurately reflects the market price.

Jeff Lynn, Republic’s chair, commented: “We have structured this offer to mirror the way our secondary market works as far as possible, and as when making any market, our role is to ensure that potential participants can make their own decisions as to whether they want to participate.”

Unlike its previous letter, Republic has now disclosed Jamba’s links to HOF Capital and that the private equity firm has a minority shareholding in Republic.

Another Revolut shareholder told City AM they considered the latter fact a “conflict of interest”.

Lynn said: “We don’t believe there is a conflict of interest for the simple reason that we would facilitate the exact same offer to any other eligible purchaser who had the desire and means to purchase a substantial volume of Revolut shares.”

HOF Capital did not respond to a request for comment.

Republic has said in its letters that Jamba is eligible to make a secondary offer under Revolut’s articles of association as it is an existing shareholder in the company.

Revolut was founded in 2015 and offers everything from accounts and international payments to cryptocurrency trading and an eSIM plan.

The fintech surpassed 10m UK retail customers last month and expects to hit 50m global users by the end of this year. It received a British banking licence in July, subject to temporary restrictions.

Revolut is also weighing up the possibility of a public listing, reportedly favouring the Nasdaq in New York rather than the London Stock Exchange.