Razorpay Announces 4th ESOP Buyback Program Worth $75 Mn

Bengaluru-based fintech unicorn Razorpay has announced an ESOP liquidation program worth $75 Mn, with participation from Lightspeed Venture Partners and Moore Strategic Ventures.

In a press statement, the fintech unicorn said that it was the company’s largest ESOP buyback program to date, with around 650 current and former employees participating.

Lightspeed and Moore will subsequently join the company’s cap table after buying the ESOPs from the 650 participants.

According to an ET report, this buyback values Razorpay at $6.5 Bn. That is a billion dollars under its peak valuation of $7.5 Bn that it hit when it raised $375 Mn in a funding round last year.

It should be noted here, however, that secondary transactions such as these typically happen at a discounted price to the last valuation a company hits during its most recent funding round. In a secondary share sale, existing investors, and employees with stock options sell their shares to new investors and the money doesn’t go to the company.

Harshil Mathur, CEO & cofounder, Razorpay, said, “In the last year, Razorpay grew over 300% and we plan to achieve $90 Bn TPV (Total Payment Volume) by the end of 2022 – thanks to the efforts of our team, the significant digital adoption by small businesses who trusted us, and investors who believed in our vision and purpose.”

Razorpay’s last ESOP buyback happened last year, with Sequoia Capital and Singapore’s GIC buying stock options worth $10 Mn.

Razorpay’s first-ever ESOP buyback took place in November 2018, when the fintech unicorn saw its largest investor Tiger Global buy shares from 140 employees worth $10 Mn. The second ESOP buyback program took place in November 2019, when Ribbit Capital and Sequoia Capital purchased stocks worth $4 Mn of employees across verticles, including entry-level staff.

Founded by Shashank Kumar and Harshil Mathur in 2014 as a payment gateway platform, Razorpay now offers SME payroll management, banking, lending, payments, insurance and other finance-related products and services.

The startup claims to enable digital payments for more than 200K small and large businesses, including Airtel, BookMyShow, IRCTC, Aditya Birla Capital, NSE, and Swiggy among others. For small businesses, the startup recently launched real-time financial solutions FTX’21: MAGIC Checkout, RazorpayX Tax Payment Suite and Razorpay RIZE.

In December 2021, Razorpay raised $375 Mn in a Series F round, raising the startup’s valuation to $7.5 Bn, up from $3 Bn in April 2021. That also makes the fastest valuation hike for an Indian unicorn in a year.

Recently, Razorpay completed the acquisition of IZealiant Technologies, a Pune-based fintech startup, taking its total acquisition count to 5.