Flipkart plans to buy back ESOPs worth $125 Million

Announced on June 23, E-commerce major Flipkart is contemplating a buyback of employee stock alternatives (ESOPs) worth nearly $125 Million while it acts on the suggested funding round, announced on June 23, 2021.

About the Plan

The plan is the component of a new funding round that the Walmart-backed company is in focus. Raising nearly $3 billion, Walmart- owned Flipkart is discussing with the investors for a round that is suspected of valuing the firm at $35 billion. Flipkart agents will have an alternative to liquidate their vested ESOPs. If it comes off, it will germinate many new greenback millionaires.

When Walmart procured Flipkart in 2018, it held down $500 million to buy back ESOPs from Flipkart’s staffers. This buyback had positioned a few many Flipkart representatives into millionaires. Flipkart employs over 15,000 full-time workforces in India.

ESOPs have gained friction within the final two years due to common exits, which have appeared in actual money for the workers. “Many startups reckon to buy back ESOPs as they go communal, or investors take such decisions as part of the initial or secondary transactions. Unlike the Valley, where ESOPs are well recognised or appreciated, most utmost Indian employees did not get the advantage earlier. However, now it has become more of a means for wealth creation here,” Ankur Pahwa, EY India’s e-commerce and shopper web chief stated.
TOI has stated that Canada Pension Plan Investment Board (CPPIB), Abu Dhabi Investment Authority (ADIA) and Japan’s SoftBank collectively might invest round $2 billion within the organisation. In contrast, Softbank would elevate to $500-550 million.

A bunch of modern-age firms like Swiggy, Zerodha and Razorpay have been buying back ESOPs. Paytm extended its ESOP provisions to $604 million in April, from about $33.4 million in the final 12 months.

Flipkart India’s commercial assertion filed with the MCA exhibits that the grant of inventory choices beneath Flipkart Stock Option Scheme 2012 weighted typical honest worth of the choices granted during the 2019-20 monetary 12 months was $106.9, in opposite to $111 in 2019, the MCA paperwork sourced through Tofler confirmed.

In 2019-20, Flipkart India repurchased 48,897 worker index choices, in contrast to 187,974 within the earlier 12 months. It gave the startup 204,940 options throughout 2019-20, compared to 294,187 beforehand.

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