Finimize - 💪 Revolut muscles its way to the top

What’s going on here?

Insiders estimated that Revolut’s share sale could value the UK fintech company at $40 billion, enough to start a new legacy as Europe’s top start-up.

What does this mean?

Revolut plans to sell about $500 million worth of existing shares, which would lift the SoftBank-backed company’s valuation to over $40 billion – a 20% jump from $33 billion in 2021. That would see Revolut fly past the market caps of UK lender NatWest and Paris-based Société Générale. And with much of the fintech market in turmoil, success really stands out. Sweden’s Klarna, to name one cautionary tale, saw its valuation nosedive from $46 billion to under $7 billion in 2022, with much of the blame pinned on interest rate rises and political risks. There could be another big win in the cards, too: Revolut has been waiting for a UK banking license for three years, which – if and when it’s granted – could work wonders on the company’s lending business.

Why should I care?

Zooming out: Home or away.

In the UK, high interest rates and election uncertainties are making folk wary of risky investments, so companies are holding off on going public until the climate is more welcoming. That’s drying up the initial public offering (IPO) market, a key cash source for UK startups. So it’s no surprise that activist investors are nudging British companies to list in the US, where they could take advantage of the country’s generally higher valuations. Stateside companies can also lure in top talent with better pay, and they have fewer restrictions.

The bigger picture: Beyond Blighty.

Europe’s IPO market isn’t faring much better than the UK’s. This week, both Italian luxury sneaker brand Golden Goose and Spanish fashion retailer Tendam hit the pause button on their IPO plans, blaming the market chaos stirred up by France's snap election. Mind you, there are US elections looming in the fall too.

What’s going on here?

Birth rates in the world’s most industrialized economies have more than halved since 1960, as the baby boom becomes more of a murmur.

What does this mean?

A recent report showed that across the world’s 38 most industrialized countries, the average birth rate for a woman was a record low of 1.5 children in 2022. That’s down from 3.3 in 1960 – the point that pushes you toward a people carrier. So now, that rate's sitting well below 2.1 children – the level where a country’s population is considered stable without relying on immigration. France and Ireland had the highest fertility rates in Europe, while the measure of childlessness more than doubled in Italy, Spain, and Japan. Interestingly, birth rates slipped in many countries with extensive policies designed to support families. Meanwhile, higher birth rates were associated with countries that have higher levels of female employment. Kids are expensive, after all, and the cost of housing was cited as an increasing barrier.

Why should I care?

Zooming out: The hard facts.

The fewer children born in a country, the smaller its future workforce. That means labor shortages are more likely, which can force companies to hike salaries to attract rare talent – a tactic that can fire up inflation. On top of that, a shrinking workforce means fewer folk paying taxes, and that’s far from ideal when the government needs to care for an aging population. But there could be opportunities for some: healthcare and AI sectors could supplement workforces and aid the elderly – and make cash doing it.

The bigger picture: A new hope.

On the flip side, investors see potential in countries with increasing populations. Case in point: India’s population of 1.4 billion – the biggest in the world – is pushing the country’s economy forward at some pace. It’s no coincidence that investors have been drawn to it, especially now that China’s stop-start economy is looking less alluring.