Razorpay Employees Cash In Their ESOPs With Tiger Global

SUMMARY

Harshil Mathur, CEO of Razorpay said that the company negotiated a secondary deal with Tiger Global

The transaction was done at a 50% premium to the valuation

The ESOP encashment is the first liquidity event for the company and its 250 employees

Nearly 140 employees of Bengaluru-based Razorpay took part in the first liquidity event for the company as the company’s largest institutional investor, Tiger Global, led a secondary deal for Employee Stock Option Plans (ESOPs).

Harshil Mathur, CEO and co-founder of Razorpay, said that the company negotiated a secondary deal with the New York-based investment fund and the transaction was done at a 50% premium to the company’s valuation at its last funding round. All existing and former employees who hold vested stocks will be eligible to sell up to 33% of their vested ESOP shares of the company.

The share sale aims to benefit employees across ranks – from team leaders to support executives.

The deal reportedly kicked off in September and expected to conclude by November end. The promoters, including payments solution company’s co-founder Shashank Kumar, have not participated in the secondary transaction.

ESOPS: How Startups Reward Loyal Employees

The Indian startup ecosystem has been bringing new opportunities for investors and entrepreneurs alike since the past few years. To reduce attrition rates and get employees invested in the company’s growth, many startups have taken to awarding stock ownership in form of ESOPs.

This year several major players have announced ESOP encashment plans for their employees, here’s some of the details:

Temasek Holdings bought shares worth $30 Mn from former and early employees of the cab-hailing company Ola as part of a secondary share sale
Walmart is obligated to purchase 6,242,271 shares from Flipkart’s ESOP pool of 11,947,026 shares worth nearly $800 Mn
Nearly 30 ex-employees of Gurugram-based logistics Unicorn Rivigo had encashed on their stock options in the company, reaping in an estimated amount of $10 Mn
Unicorn food delivery company Swiggy approved its first employee stock repurchase programme. The share buyback, which had to be implemented in June, was estimated at over $4 Mn (INR 27 Cr)

As the Indian startup ecosystem matures, many company executives are reaping rich rewards by opting for ESOPs at the growth stage of the startup.

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