Social commerce platform Meesho and food delivery app Swiggy have given employees an option to sell their stock options in separate buyback programmes, top company executives said, in the latest share buybacks by startups to put money in the hands of staff.
Swiggy will buy back shares worth $7-$9 million and about 40% of eligible employees are expected to cash out. On the other hand, existing investors in Meesho are buying back shares worth $5 million from employees.
“With this second buyback we want to reward our employees for their contribution in building Meesho,” chief executive Vidit Aatrey told ET.
Eligible employees, from the junior-most executives to senior leaders, can exercise their options to sell up to 100% of their vested employee stock ownership plans (Esops), he added without disclosing the terms of the sale.
It will be at a much “higher valuation compared to the last round,” he added. Sources told ET the company has been valued at $1.2 billion.
Meesho raised $125 million in August, led by South African media and internet group Naspers, with participation from Facebook and existing investors SAIF Partners and Sequoia Capital, at a valuation of $700 million.
Typically, secondary transactions in startups are at discounts compared to when capital is infused into the company.
At Swiggy, this is the second time that the restaurant discovery platform is undertaking a buyback after June 2018.
Girish Menon, Vice President – HR of Swiggy, said: “As the food delivery business makes a steady recovery and the future continues to look promising, we want to reward our team that has worked relentlessly over the last many months with a meaningful wealth creation opportunity through an Esop liquidity program.”
Menon said family offices of India’s leading industrial houses and a few high net-worth individuals are buying out these shares, without disclosing the names of investors.
“Over 40% of our employees with Esop benefits - current and those we had to unfortunately part ways with earlier this year- will be eligible to exercise their stocks. Some of them will be able to liquidate their Esops at as much as 3x premium to the allotted price,” he added.
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