Sequoia, GIC To Enable Razorpay’s $10 Mn ESOP Buyback

SUMMARY

About 750 former and current employees of Razorpay are eligible to sell 33% of their allocated ESOP shares

The average size of this sale among the staff is in the range of INR 11-15 Lakh per person

Razorpay is reportedly looking to raise another $150 Mn to double its valuation to $2 Bn

Payments gateway major Razorpay, on Thursday (March 4), announced that its existing investors Sequoia Capital and Singapore’s GIC are buying back shares worth $10 Mn (INR 73 Cr) from its workforce under the employee stock ownership programme (ESOP).

About 750 former and current employees at the fintech unicorn are eligible to sell 33% of their allocated ESOP shares in this exercise. The average size of this sale among the staff is in the range of INR 11 Lakh – INR 15 Lakh per person, though it will differ for each employee. Typically, anyone who has worked with the company for a year holds these stocks.

Razorpay currently has a workforce of 1,300 employees and is planning to hire another 650. The company’s CEO and cofounder Harshil Mathur said that this is the third time the company has carried out such a buyback exercise. Prior to this, RazorPay bought back ESOPs worth $10 Mn in two tranches.

The announcement coincides with media reports that Razorpay has been in talks with Sequoia, Tiger Global and GIC to raise another $150 Mn-$200 Mn funding at a valuation of $2 Bn. The company, founded by Shashank Kumar and Mathur in 2014, entered the unicorn club last October after raising $100 Mn in a Series D at a valuation of $1 Bn.

Razorpay is now seeking to raise funds at double the valuation on the back of the uptick in digital transactions in recent months, as the Covid-19 crisis has pushed small businesses as well as enterprises to adopt online payments as an option.

The fintech unicorn powers digital payments for over 200K small and large businesses, including Airtel, BookMyShow, IRCTC, Aditya Birla Capital, NSE, among others. The company also plans to launch products for its neo-banking business Razorpay X and lending business Razorpay Capital to double its growth in 2021.

In the financial year 2020, the company had reported a revenue of INR 519.42 Cr with expenses worth INR 525.41 Cr, leading to a net loss of INR 6.15 Cr. The fintech startup had spent INR 202.15 Cr to earn INR 197.5 Cr in FY2019, leading to a net loss of INR 3.26 Cr.