MUMBAI | BENGALURU: Employees of Flipkart are in for a Bonanza gain with about $500 million outlined towards fungibility of employee stocks as part of the company’s sale to Walmart, This is said by two people.
Flipkart at a valuation of nearly $21billion has generated as acquitted by Walmart one of the largest pools of wealth for employees in Indian corporate history.
The deal has lifted the total worth of Flipkart’s employee stock ownership plans, including unvested shares, to $2 billion (about Rs 13,455 crore), these people said. Esops held by about 100 current and former employees of Flipkart are now estimated to be worth more than $1million, one of them said.
Walmart will offer a 100 percent buyback of conferred shares by Flipkart employees, the sources said.
Flipkart’s stock options are granted over a four-year period, with employees allowed to confer them every month after a one-year inception.Flipkart did not immediately respond to queries sent of ET.
Flipkart’s employee stock options pool is now worth nearly the combined Esop pools of Axis Bank (Rs 5,065 crore), HCL Tech (Rs 5,498 crore) and Wipro (Rs 3,040 crore), as per the stock prices of these companies as on May 8, show data sourced by Capitaline and compiled by ETIG Database.
Infosys remains the flag-bearer of employee wealth creation in India, having generated more than Rs 50,000 crore of stock options for employees since its inception until 2011. The company, in 2000, offered Esops to more than 2,000 employees, turning several of them into millionaires. In 2016, Infosys re-launched its Esop for junior to middle-level management employees after a span of 13 years. Infosys’ Esop pool is now worth Rs 2,693 crore, as per the ETIG Database. The values of the Esop pools of these Indian corporates are not adjusted for rights, buybacks or stock splits.
Flipkart has time and again provided fungibility for its employees. In December, the company completed its fourth Esop repurchase plan worth $100 million, the largest such repurchase by a private company in the country. More than 3,000 current and former employees of Flipkart, its fashion arms Myntra and Jabong, and its payments arm PhonePe participated in that repurchase exercise.
In 2015, Flipkart sold shares worth about Rs 240 crore in its employee trust fund to wealthy individuals for the first time in eight years. It generated liquidity for its employees also through share reclaim, especially for early employees who had been with the company since 2010.
Overall, more than 18,000 employees of various companies, mostly tech and internet firms, have benefitted from liquidation of employee stock options and share buybacks, according to an estimate by talent acquisition firm CareerNet. But less than 5% of the Esop wealth created has been liquidated through private sale of employee stock, it said in a report. Food-delivery firm Swiggy is the latest domestic internet company to offer an employee share buyback programme pegged at over $4 million, ET reported on May 9.
Last year, 47 employees of online payments firm Paytm sold shares worth about Rs 100 crore to both internal and external buyers. Paytm has more than 500 employees holding nearly 4% shares in its parent company.
Cab-showering platform Ola, mobile advertising firm InMobi, MakeMyTrip and Info Edge, too, have generated fungibility for their employees earlier. Payments company Citrus Pay, which was acquired by bigger rival PayU for about Rs 860 crore in 2016, saw 50 employees earn about Rs 43 crore by selling their stock options.
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