Revolut’s CEO and cofounder Nik Storonsky has made it clear that the fintech company sees the U.S. as a more appealing option for going public than the London stock market. In a recent interview on the 20VC podcast, Storonsky explained that the decision stems from the differences in liquidity and trading costs between the two markets. He emphasized that while trading in the U.S. generally lacks fees, the U.K. imposes a 0.5% stamp duty on trades, raising the overall cost of investing in U.K.-listed companies. This disparity leads him to view the current environment in London as “just not rational” for a public listing, suggesting that it would not provide a competitive edge for companies like Revolut.
During the discussion, Storonsky highlighted that Revolut essentially operates like a public company, given the stringent regulatory framework it must adhere to as a licensed bank. However, he indicated that there’s no immediate rush for the fintech to proceed with an initial public offering (IPO). He predicted that the company would eventually explore going public, primarily to offer venture capital investors an opportunity to sell their shares in a more liquid market. The context of his remarks comes as Revolut has been recently valued at an impressive $45 billion during a secondary share sale, allowing employees and early investors to monetize their stakes.
The potential move by Revolut to the U.S. stock market represents a significant blow to the London financial landscape, which has already faced challenges with companies opting for alternative markets. In recent years, numerous firms have shifted their listings away from London, prompting government officials to discuss reforms aimed at revitalizing the U.K. stock market. However, the initial reforms introduced have garnered mixed reactions from market participants, raising questions about their efficacy in making London a more attractive venue for public listings.
Central to Storonsky’s argument is the contentious issue of stamp duty on share trading in the U.K. This 0.5% tax discourages investment in domestic stocks, especially when compared to U.S. markets that impose little to no trading costs. Investors often prefer to move their funds to overseas markets, where they can avoid the additional financial burden. The sentiment surrounding this issue found new support on a recent Monday as Alastair King, the newly appointed Lord Mayor of the City of London, voiced his concerns about the existing tax structure.
King’s commentary resonated with the growing need for reform in the financial sector. He illustrated the inconsistencies within the current system, questioning the rationale behind taxing domestic investments while allowing tax-free purchases of foreign stocks like Tesla. He suggested that reassessing the stamp duty could provide a vital boost to homegrown companies aiming to scale. Such adjustments could help retain more domestic firms in the U.K. and encourage local investment, which has become increasingly reliant on U.S. capital.
King’s call for change underscores the vital need to enhance the attractiveness of the U.K. stock market for new listings. If companies like Revolut choose to forgo a London IPO in favor of New York or other markets, it could signify a shift in the financial ecosystem. As companies seek a competitive edge through improved liquidity and cost-efficiency, the response from regulators and policymakers will be crucial in determining the future landscape of stock trading in the U.K. The ongoing discourse about stamp duty and market reforms could play a key role in shaping the U.K.’s financial attractiveness in the coming years.
