Revolut CEO to Borrow Against Shares
Revolut's CEO may borrow up to $250m against his shares, according to reports
Revolut has approached investors to increase the amount its CEO can borrow against his stake in the company. The proposed increase would allow the CEO to borrow up to $250m, five times the current limit.
## Background The company's governing documents currently allow employees who own over 20% of its ordinary shares to pledge up to 10% of their holdings as security for borrowing without board approval. The CEO, who owns 29% of the company, is the only person who meets this eligibility requirement. He can currently pledge a further 5% with the approval of a majority of directors, but the current limit on borrowing against his shares is $50m.
## Proposed Changes The proposed changes, codenamed "Project Shasta", would raise the cap to $250m and remove the limits on the proportion of shares that can be pledged. This would free the CEO to cash out his stake without lowering it. The changes would also expand the classes of shares that can be used as collateral against the borrowing.
## Implications A person familiar with the matter has stated that the CEO could still exceed the new $250m cap if the company's board and 75% of shareholders approve the move. The company has stated that the updates to its articles of association are routine and do not relate to an IPO timeline or strategy. The financial superapp recently reached a $115bn valuation in an employee share sale, and the CEO is reportedly negotiating a new share deal that would increase his stake in the company if it hits a valuation of about $500bn.
The proposed changes have been met with a statement from a Revolut spokesperson, who says that the company routinely updates its articles of association to reflect its current scale and valuation. The spokesperson also noted that any borrowing under the new cap would remain subject to applicable regulatory requirements.
