Flipkart ESOP Repurchase Plan: Buyback To Take Place At $85.2 Per Unit

A day after the ecommerce unicorn’s board approved a $100 Mn ESOP repurchase plan, Flipkart has confirmed that the repurchase of stock options will take place at $85.2 (INR 5,561) per unit. Each transaction will also carry a fee of $3-$4, sources revealed.

As part of the employee stock ownership buyback plan, existing employees of Flipkart will be able to sell 25% of their vested shares at the specified rate. Former employees, on the other hand, will be allowed to sell 10% of their stake in the 10-year-old startup.

Speaking about the development, Flipkart Group CEO Binny Bansal stated in an email to employees, “Flipkart is among the few companies that have given this opportunity, not once but four times in the past five years. It’s only because as an organisation, Flipkart’s culture is steeped in transparency and fairness – the first step of which is to ensure employees are rewarded for their dedication and hard work. Without you, Flipkart couldn’t have become the flagbearer of Indian e-commerce.”

Touted as one of the largest share buyback programmes till date in the Indian startup sector, the move is expected to benefit more than 6,000 current and former employees at Flipkart. Apart from Flipkart, people working at subsidiary companies such as online fashion retailer Myntra and payments unit PhonePe will also be a part of the repurchase programme which is expected to close by December.

As confirmed by sources, Flipkart’s stock options are granted over a four-year period, with employees vesting them every month after the one-year threshold.

In the past, Flipkart sold a marginal stake, worth $27 Mn-$30 Mn (INR 180 Cr-INR 200 Cr), in its employee trust fund to high-net-worth individuals in 2015, in a bid to allow employees to cash out their shares pre-IPO. Later in September 2016, reports surfaced that Flipkart had issued ESOPs to over a third of its workforce.

In July this year, Flipkart reportedly offered stock options to several senior executives of Jabong.com also under the ESOP plan. The shares were given on the basis of Flipkart’s $10.2 Bn valuation in March 2017. Commenting on the development, a source said at the time, “They have given the stock with Flipkart option to 25-30 people at Jabong and as the next round of funding happens, the valuations will be revisited.”

Among the employees that have reportedly received the stock options are Jabong’s Chief Buying Office Kalyan Kumar, Chief Business Officer Rahul Taneja, CFO Vinod Abrol, and COO Muralikrishnan B.

The latest development comes at a time when the ecommerce giant has amassed up to $4 Bn cash on its balance sheet, following a massive $2 Bn fundraise from Softbank in August 2017. The investment was reportedly part of the earlier $1.4 Bn round from Tencent, eBay and Microsoft, which took place at a post-transaction valuation of $11.6 Bn in April 2017.

Most recently, Flipkart concluded an immensely successful festive season sale, wherein it claimed to have accounted for more than 70% of all ecommerce orders placed in the country. Held between September 20-24, the Big Billion Days sale saw 2.3x more business compared to Amazon’s Great Indian Festival sale.

The $100 ESOP repurchase programme will allow both current and former employees of Flipkart to liquidate their stake in the ecommerce company.

(The development was reported by ET)