Online e-commerce platform Flipkart has repurchased employee stock options (ESOPs) of worth $100 million from over 3,000 present and past employees, including Myntra and Jabong.
Initiated in October, the buyback programme is the single largest liquidity providing event in India by an unlisted, private company to its ESOP holders.
In the past, the Bengaluru-based company has bought ESOPs from its employees. This is the fourth instance in the past five years.
“Employees are our biggest source of strength, without whom Flipkart couldn’t have built the e-commerce industry in India. As an organisation, we believe they should be equal partners in Flipkart’s success. This ESOP repurchase programme is an extension of that culture, and a token of thanks for the dedication and hard work they have put in over the years,” said Sachin Bansal, Chairman of Flipkart, and Binny Bansal, Group Chief Executive Officer in a joint statement.
The news comes when Flipkart in August announced an investment — a mix of primary and secondary capital — from SoftBank Vision Fund.
Last month, SoftBank offered to buy shares of Tiger Global, other investors as well as existing and former employees in Flipkart.
The investment behemoth offered $85-89 per share that roughly values the online marketplace in the range of $9-10 billion.
At a time of fund infusion, Softbank had also agreed to buy shares worth $1.2-$1.4 billion from Flipkart shareholders in a secondary buyout.
Tiger Global is expected to sell share worth $700 million in the buyback. The buyback is happening at a lower valuation in contrast to Flipkart’s peak valuation ($15 billion), however, it’s a much-needed exit for Lee Fixel-led investment firm including early backers like Accel.
The buyback programme from Flipkart is a good sign for the Indian startup ecosystem where startups give little value to ESOPs when in most cases, the stock options given out by startups aren’t even worth the paper they are printed on.