ESOPs galore in IPO-bound firms
According to research by Fintrackr, a dozen companies have announced ESOP buybacks worth over $100 million in the first half of 2021
Ride-hailing unicorn Ola is the latest startup to reward its high impact employees with expanded employee stock options (ESOP). Ahead of its initial public offer (IPO), Ola has said that it would be expanding the ESOP pool to Rs 3,000 crores, with an additional allocation of Rs 400 crore worth of stock to its employees. Ola founder Bhavish Aggarwal said the ESOP programme is aimed at giving the option of long-term wealth creation for its employees. In early July, Ola had received $500-million from Temasek and Plum Wood Investment, an affiliate of PE fund Warburg Pincus, in a fresh round of funding.
Other ESOP offers on the anvil
Employees of IPO-bound Life Insurance Corporation of India (LIC) might get stock options as a part of the new LIC General Regulations, 2021. The insurer will not introduce differential voting right shares. LIC’s IPO is expected in the last quarter of FY22 and all amendments of the LIC Act, 1956 have been notified by the Government to ease the process of going public.
Another IPO-bound unicorn, One97 Communications, which owns Paytm, filed its Draft Red Herring Prospectus (DRHP) on July 16. The company has given its nod for the addition of 242,904 stock options, which now takes its total ESOP pool to 2,409,428. This addition has taken the valuation of One 97’s ESOP pool to a staggering $604 million and is one of the highest ever in the Indian startup ecosystem.
Laqshya Media recently became the first Out of Home media company to reward its employees through ESOPs for their hard work, association and contribution to company building.
ESOP buybacks
Last year, a bunch of high-valued startups such as Unacademy, Zerodha, Firstcry, BharatPe, Urban Company had announced ESOP buybacks that put money back into the hands of their employees.
According to research by Fintrackr, a dozen companies have announced ESOP buybacks worth over $100 million in the first half of 2021. Udaan, ShareChat, Razorpay and CRED are few companies that have already bought stocks worth $73 million from their employees.
The largest player in this context is Zerodha. Zerodha has said that it will buy ESOPs to the tune of $27 million in 2021. Udaan, a B2B e-commerce unicorn bought ESOPs worth $23 million in April, while ShareChat, a social media unicorn, shelled out $19 million for ESOPs from existing as well as former staff members.
Walmart-owned e-commerce giant Flipkart is planning an ESOP buyback worth $80million, a move that will create a big group of new millionaires in the country.