Founder and CEO of Paytm, Vijay Shekhar Sharma has pledged about 5% of his personal holding in Paytm Mall for the ESOP pool. This move would add about $50 Mn worth of stocks to the ESOP corpus, which will then become almost 10% of the overall company.
VSS stated on the move, “I have given parts of my holding towards the employee share pool. I had done something similar long time back for One97 Communications and I have done this now for Paytm Mall,” he said.
As per regulatory filings for the financial year 2017 with the Registrar of Companies, Sharma who had over 19% stake in Paytm Mall now owns about 14% stake.
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It was in February this year, Paytm had launched Paytm Mall as a new version of its three-year-old ecommerce arm. It offers a combination of the mall and bazaar concepts to Indian consumers. So while Noida-based Paytm started out as a mobile payments and recharge business, over the years the Alibaba-backed company has built its ecommerce marketplace by selling apparel, footwear, smartphones, bus tickets and movie tickets.
After separating the companies, Paytm had transferred about 800 staff to Paytm Mall and since then has been hiring across key positions in the company with an overall target of hiring 2,000 people.
In March this year, Paytm Mall had raised $200 Mn from Alibaba and SAIF Partners. Earlier this month, Vijay Shekhar Sharma disclosed that Paytm plans to invest up to $2.5 Bn to grow the Paytm Mall within three to five years as it eyes top spot currently being fought over by Flipkart and Amazon.
The move comes close on the heels of the $100 Mn ESOP repurchase programme floated by ecommerce major behemoth Flipkart in October this year. This was the largest buyback ever offered by a privately held Indian startup. In July this year, Flipkart had reportedly offered stock options to several senior executives of Jabong.com also under the ESOP plan. In fact earlier this year, about 47 employees of Paytm have reportedly sold shares worth about $15.3 Mn (INR 100 Cr) to both internal and external buyers, according to company executives who declined to name the buyers. So it’s not founder Vijay Shekhar Sharma alone, who made it to the 6th “Hurun India Rich List 2017”, a list of the richest people in India with a cut-off at $153 Mn (INR 1,000 Cr) this year, who is reaping the benefits of the startup’s success.
Hence this move by Vijay Shekhar Sharma to further up the ESOP pool in Paytm Mall by pledging his own personal stock would help the company attract more people, especially when it harbours desires to compete against bigger rivals like Amazon and Flipkart. Also with Flipkart and Paytm, both being India’s most valued startups toeing the ESOP route, more startups will be encouraged to tread this route hopefully in the coming times.
[The development was reported by TOI]