Flipkart: Flipkart has plans to buy back ESOPs worth $125 million

Bengaluru: Flipkart is mulling a buyback of employee stock options (ESOPs) worth nearly $125 million, sources told TOI. If it happens, it will create many new dollar millionaires. The plan is part of a new funding round that the Walmart-backed company is in the midst of. Flipkart is talking to investors to raise about $3 billion, a round that is expected to value the firm at $35 billion.

Flipkart employees will have the option to liquidate their vested ESOPs. In 2018, when Walmart acquired Flipkart, it had reserved $500 million to buy back ESOPs from Flipkart’s staffers. The buyback had turned a few hundred Flipkart employees into millionaires. Flipkart employs over 15,000 full-time employees in India.

TOI has reported that Canada Pension Plan Investment Board, Abu Dhabi Investment Authority (ADIA) and Japan’s SoftBank together could invest around $2 billion in the group, while SoftBank would pump in $500-550 million. A number of new-age companies, including Swiggy, Zerodha and Razorpay, have been buying back ESOPs. In April, Paytm expanded its ESOP pool to $604 million, from around $33.4 million last year.

ESOPs are a widely used retention tool. It allows employees to purchase the securities of the company at a predetermined price, within the defined exercise period. Stock options are subject to a vesting period which could be time or performance-based or a combination of both.