Exclusive: Byju's creates additional ESOP pool worth over Rs 1,500 Cr

Byju’s has had a great run this year. It’s the only consumer internet company to raise over $1 billion along with Flipkart in 2020. The company’s valuation also shot up to $11.1 billion in September from $8 billion in January. This stellar performance seems to have prompted Byju’s to add a couple of hundred million dollars to its existing ESOP pool.

The board of directors of Byju’s have passed a special resolution to approve the reservation and allocation of a pool of 71,698 equity shares towards additional management subscription rights and ESOPs. Importantly, this new pool will be in addition to the existing pool reserved under “Think and Learn Pvt Ltd ESOP 2019.”

Fintrackr’s estimates show that the fresh addition to the ESOP pool is north of Rs 1527.5 crore or $208 million. With this, the valuation of Byju’s ESOPs pool has touched Rs 3,000 crore mark. In October last year, the Bengaluru-based company had added 99,259 shares worth anywhere between Rs 1300 to 1500 crore.

With this, Byju’s joins the group of some of the large-scale consumer internet startups in the country which have a wide ESOP pool. Paytm that is currently valued at $16 billion, has an ESOP pool exceeding Rs 3,000 crore. With the recent addition of over Rs 1,050 crore worth stocks, the size of Oyo’s overall ESOP pool has crossed Rs 4,300 crore. Swiggy is another notable startup which expanded its ESOP pool to Rs 1,589 crore. It added 14,500 shares in April.

According to a valuation report (based on discounted cash flow method or DCF) filed by Byju’s on July 31, the company was valued around $3.6 billion. Several investors including BOND Capital, Silver Lake, General Atlantic and Tiger Global paid up to 174% or 2.7X premium on the acquisition of each share in the Series F round. 

If we compare the premium paid by investors over DCF in other internet companies, it’s largely in the range of 20-50%. For example, when Paytm raised its $1 billion round last year, Series G investors including T. Rowe Price, SoftBank and Ant Financial paid a 47% premium over the DCF value per share.

The premium paid by the investors of Byju’s demonstrates their great confidence in the future potential of the edtech conglomerate. To up its ante in the segment, Byju’s had acquired WhiteHat Jr in an all-cash deal worth $300 million and is reportedly in an advanced stage to take over doubt clearing app DoubtNut in about $125 million. 

The company’s co-founder and CEO Byju Raveendran had hinted that Byju’s will acquire more startups in the space. On the lines of previous acquisitions, the firm will go for cash deals, said Raveendran in a recent interview to TechCrunch.