Social commerce major Meesho set to buy back ESOPs worth $5.5 Mn

Social commerce platform Meesho has initiated an employee stock ownership plan (ESOP) liquidity program worth $5.5 million for all eligible current and former employees with vested stocks. The ESOP buyback program will take place sometime in November. 

Meesho’s employees who are currently on roll and have vested ESOPs as of November 30 will be eligible for the buyback along with former employees, according to two sources aware of the details of the liquidity scheme.

“Current employees will be allowed to sell 35% of their vested shares in this round while former employees will be allowed to sell 10% of their vested shares,” a source told Entrackr requesting anonymity since details about the buyback are not public yet. 

Meesho will place a cap on the amount of buyback for eligible employees at Rs 1 crore, another person said. 

This is the second ESOP buyback by Meesho in less than a year and its third since 2020. In February last year, it initiated an ESOP buyback worth $1 million. Then in November 2020, the company announced the second round of ESOP buyback worth $5 million. 

Meesho had recently raised $570 million led by Fidelity Management and Eduardo Saverin’s B Capital Group at a valuation of almost $5 billion. 

ESOP buyback has been quite common among growth and late-stage startups this year. Meesho will join the likes of well-funded companies like Browserstack, Udaan, Unacademy, ShareChat, Razorpay, CRED, MPL, Licious, Classplus and HealthifyMe which have bought back ESOP held by their employees in the past 10 months.

As per Fintrackr’s data, around a dozen companies announced their ESOP buyback plans worth more than $100 million in the first half of 2021. In the latter half, IPO-bound Paytm converted ESOPs granted to former employees into shares of the company. 

Foodtech major Swiggy announced an organisation-wide ESOP liquidity program for the stock option holders among its employee base. The company also recently allotted equity shares to its employees and top executives respectively. Entrackr was the first to report this.

Online brokerage firm Zerodha, which announced a Rs 200 crore ESOP buyback in May, is likely to exercise the program in the coming months.